IMF commends Morocco’s tax reforms

The International Monetary Fund (IMF) commended Morocco’s tax reforms which enabled an enlargement of the tax base, narrowed the fiscal deficit and helped finance key reforms.

“As a result, tax revenues in 2024 have been greater than expected. With only a small part of the additional tax revenues being saved, the central government’s deficit for the year was 4.1 percent of GDP compared to the 4.3 announced in the 2024 Budget,” the IMF said at the end of article IV consultations.

Higher-than-expected tax revenues in 2025 should be used to accelerate the pace of debt reduction to levels closer to pre-pandemic, it said.

However, continuing to finance structural reforms may require further efforts to expand the tax base and rationalize spending, including by reducing transfers to state-owned enterprises as part of the ongoing reform of the sector and expanding the use of the Unified Social Registry to all social programs, the IMF said.

Overall, the Fund expects the Moroccan economy to grow by 3.9% in 2025, forecasting an improvement in farming output following years of consecutive droughts.

The IMF sees inflation stabilizing at around 2%, despite “significant uncertainty regarding the economic impact of geopolitical tensions and changing climate conditions.”

“With inflation expectations anchored around 2 percent and little signs of demand pressures, the current broadly neutral monetary policy stance is appropriate, and staff agrees with Bank Al-Maghrib that future changes of policy rates should remain data dependent. With inflation back to around 2 percent, Bank Al-Maghrib should continue its preparation to adopt an inflation-targeting framework,” it said.

The IMF also called on the government to set up incentives for SMEs to grow and urged measures to offer jobs at a context where the agricultural sector lost significant workforce due to droughts.