IMF: Morocco’s Economic Policies & Fundamentals are Sound

Morocco’s macroeconomic policies and performance remained sound, despite volatility in agricultural output and elevated external risks, says a statement issued by the International Monetary Fund.

“The Moroccan authorities remain committed to important fiscal, financial and structural reforms, which should strengthen the economy’s resilience to external shocks and support higher, more inclusive growth”, adds the statement released Monday by the IMF team after completing 2nd review mission of the Precautionary and Liquidity Line for the north African Kingdom

The IMF experts also say Morocco continues to pursue fiscal, financial, and structural reforms that support higher and inclusive growth. They support Morocco’s reform efforts to reduce unemployment and regional and social disparities.

An IMF staff team led by Nicolas Blancher visited Morocco from June 29 to July 10, 2017 to conduct discussions with Moroccan authorities on the second review under the Precautionary and Liquidity Line (PLL) arrangement.

The IMF Executive Board approved the PLL arrangement for Morocco in the amount of SDR 2.504 billion (about US$3.42 billion) in July 2016. The authorities have not drawn on the PLL and intend to keep the arrangement as precautionary.

After last year’s drought that impacted on growth, Morocco’s economic growth is expected to rebound this year to 4.8 percent, driven by strong recovery in the agricultural sector, while non-agricultural growth, which has remained subdued, should pick up modestly by 0.2 percentage points, says IMF.

Inflation in Morocco is expected to slow to 0.9 percent for the year, adds the Fund, noting that unemployment remains high, especially among the youth and women.

According to the IMF, the current account deficit should reduce to 4.0 percent of GDP in 2017, due to continued export growth and despite an increase in energy imports, while Gross international reserves are expected to reach about US$24 billion at the end of 2017, about 6 months of imports.

The IMF team, which visited Morocco, welcomes the country’s intention to gradually move to a more flexible exchange rate regime, which would allow the Moroccan economy to better absorb external shocks and preserve competitiveness in the future.

The fiscal deficit is projected to narrow to 3.5 percent of GDP by 2017, due to stronger revenue performance and contained spending. The IMF team also commends Moroccan authorities’ plans to continue fiscal reforms, especially towards a more equitable and fairer tax system, and to reduce public debt to 60 percent of GDP by 2021.