Morocco’s Central Bank pauses monetary tightening as inflation eases

Morocco’s central bank pauses its monetary tightening as inflation is expected to further drop to 2.6% in 2024 from 6% in 2023 amid preparations for reconstruction in earthquake-hit areas.

Speaking to the press Abdellatif Jouahri highlighted the uncertainties of the global economy and the need for vigilance, adding that holding the key interest rate as well as government measures and an easing of external factors all contributed to lower inflation levels.

However, Jouahri said the impact of the earthquake on the Moroccan economy is not yet determined, noting that the central bank will have a clear picture in December.

The earthquake killed nearly 3000 people in the provinces of Marrakech, Al Haouz, Taroudant, Chichaoua and Ouarzazate mostly.

Authorities promised 30,000 dirhams annually to affected households and a reconstruction aid of 140,000 dirhams for totally collapsed homes and 80,000 for partially damaged ones.

The money will be raised from the state budget, local resources, international aid, and a fund that has been launched to collect donations. The fund has amassed over 1 billion dollars so far.

Jouahri said it was not yet clear how reconstruction would impact Morocco’s debt but said that the IMF had financing adapted to reconstruction that Morocco could seek.

Morocco had received a flexible credit line worth 5 billion dollars from the IMF which it said it would use as precautionary to offset external shocks.

Morocco also received 1.3 billion dollars in IMF financing to address climate change issues.

While the impact of the earthquake is yet to be determined, the central bank said Morocco’s economy would grow by 2.9% this year and 3.2% next year.