Morocco’s King receives Central Bank’s report confirming country’s economic resilience

Morocco’s economy showed resilience to external shocks thanks to the diversification strategy and the reforms undertaken over the past two decades, said Governor of Bank Al-Maghrib in an address he made Saturday before King Mohammed VI.

The Moroccan economy, suffering from a challenging global context and a particularly severe drought, grew by 1.3 pc in 2022 against 8 pc in 2021, added Central Bank governor Abdellatif Jouahri who presented to the King a report on the economic, monetary, and financial situation for the year 2022.

In his address, the Governor said despite adverse economic context and the effort made to ease the impact of prices hike on households and enterprises, the public finance situation continued to recover, with the budget deficit falling to 5.2 % of GDP.

On the other hand, Jouahri outlined that foreign trade sustained the momentum observed in 2021, driven by a noticeable performance of World Crafts of Morocco and the phosphate sector. Travel receipts reached a record level, and the exceptional flow of the remittances was maintained. These changes helped contain the current account deficit at 3.5 percent of GDP, while Bank Al-Maghrib’s official reserve assets increased to the equivalent of five and a half months of imports.

Like most countries in the world, Morocco was not spared the spike in inflationary pressures which marked the year, said the Central Bank’s Governor. After averaging no more than 1.5 pc over the past 20 years, inflation stood at 6.6 pc in 2022, its highest level since 1992.

Responding to this situation, he said, Bank Al-Maghrib initiated a tightening of its monetary policy to bring inflation back to levels in line with the price stability objective. Thus, the Bank raised its key rate to reach 2.5 percent by the end of the year. At the same time, it ensured an adequate financing of the economy and continued to meet all the banks’ requests for liquidity. It also pursued the implementation of its programs dedicated to very small, small and medium-sized enterprises (VSMEs).
Furthermore, the major changes unfolding in the global landscape, with geopolitical fragmentation, the rise of economic sovereignty, the recurrence of extreme climate phenomena and the worsening of water stress, foreshadow significant challenges the country has to face in the years to come.

To address these changes, the Governor said it is necessary to enhance the adaptability and agility of the public policy and to strengthen the national economy’s resilience.

To this end, the Governor emphasized that the development of the human capital should remain top priority. In this respect, he outlined that two decisive projects give hope for a qualitative leap forward: The first one is the generalization of social protection initiated by the King in 2021 and the second is the reform of the education system, for which important efforts have been made over the past years.

At the economic level, the Governor stressed that the reform of the public sector, called for by the King in 2020, would allow adjusting the structural dysfunctions of public institutions. At the same time, the large mobilization to boost private investment further offers hope for a new impetus for growth and employment.

Moreover, the Governor emphasized the need to rationalize public resources, which is becoming a must and requires the speeding up of several projects that would free up buffers necessary to reinforcing social safety nets. It is therefore increasingly urgent to achieve the subsidy reform initiated in 2013, and that of pensions.

At the international level, under royal leadership, Morocco has asserted itself as a credible partner and a country of peace and stability, said the Governor, citing in this regard the benefits of removing the country from the FATF and European Union grey lists, the Flexible Credit Line granted by the IMF, and the hosting of the IMF and World Bank Annual Meetings in Marrakech next fall.