IMF highlights Morocco’s sound economic fundamentals

The International Monetary Fund (IMF) said Morocco’s economic fundamentals and policy frameworks are sound as the government remains committed to reforms amid a positive macroeconomic outlook.

Morocco’s policy priorities “include continued fiscal prudence and progress toward exchange rate flexibility, and reforms of taxation, governance, oversight of state owned enterprises, fiscal decentralization, and the business environment,” the IMF said in a recent report after the approval of a Precautionary Liquidity Line (PLL) for Morocco worth 2.27 billion dollars.

Building on progress made under past PLL arrangements, the IMF said the new PLL objectives would be to enhance macroeconomic resilience in an adverse international environment, and to help the authorities move towards a new growth model that is more private sector-led, broad-based and inclusive, including through strengthened public governance and reduced corruption and inequalities

The IMF also recommended in its reform a comprehensive reform of the tax system as well as keeping the public payroll below 10.5 percent of GDP over the medium term.

“Continuing the transition to a greater exchange rate flexibility will strengthen external resilience,” the IMF said, adding that broadening the dirham fluctuation band will “put the economy in a better position to absorb potential external shocks, and preserve competitiveness.”

Morocco’s Doing Business ranking rose from 69 in 2018 to 60 in 2019, reflecting ongoing efforts to strengthen the local business environment, effectively making Morocco a prime destination for foreign investment, the IMF said.