Morocco to treat IMF credit line as precautionary

Morocco will continue to consider the IMF flexible credit line of $5 billion as precautionary and would only draw on it in case of external shocks like the Covid-19 pandemic, Morocco’s finance ministry said.

The credit line is only granted to countries with sound macroeconomic and financial fundamentals and would add to Morocco’s credibility in the international debt market, head of external finances at the ministry told l’Economiste.

The credit line would thus present no risk on Morocco’s external debt because it will be treated as an insurance against external shocks and would provide Morocco with liquidity in extreme cases to fund its trade balance.

After approving the credit line, the IMF had underscored the resilience of the Moroccan economy. However, it noted that the country remains exposed to worsening global economic outlook, notably inflationary pressures on commodity prices and the impact of drought.

The IMF credit line came after Morocco exited the grey list of the Global financial crime watchdog, the Financial Action Task Force, following which it successfully raised $2.5 billion in a dual-tranche bond.

The Moroccan government hopes the trust of international financial institutions in Morocco would help attract more investors to the country.