Morocco’s debt rating outlook stable at Ba1, Moody’s says

Moody’s Ratings has affirmed Morocco’s stable credit outlook at Ba1, saying the rating reflects Morocco’s institutional strengths and robust external position.

“The stable outlook reflects our expectation that the government will pursue economic and social reforms to improve the economy’s resilience to shocks while keeping the debt burden stable,” Moody’s said.

“We expect the government to continue fiscal consolidation efforts in the face of spending pressure from social security reforms and an extensive pipeline of infrastructure projects as well as ongoing exposure to shocks, including those related to climate,” it said.

Fiscal consolidation earned Morocco improved ratings by S&P and Fitch ratings, while the IMF and World Bank praised in their recent reports the resilience of Morocco’s public finances.

Morocco’s government debt is sustainable as efforts are ongoing to cut it further below 70% of GDP, finance minister Nadia Fettah Alaoui said in June.

The share of domestic debt in the treasury’s debt portfolio exceeds 75%. Secondly, the structure of the debt is essentially long-term and its average cost is around 3%. This debt is mainly (90%) backed by fixed rates.

Morocco expects to further cut its fiscal deficit from 4% in 2024 to 3.5% in 2022 and 3% in 2023, despite an increase in spending on social protection, Fouzi Lekjaa, minister in charge of the budget said in May.