Morocco’s Central Bank maintains accommodative policy to promote growth

Morocco’s central bank kept its key interest rate unchanged at an all-time low of 1.5%, in a sign that it is more concerned about promoting growth, than curbing a high inflation caused by exogenous factors.

The Bank said inflation would soar to 5% in 2022 and drop to 2% next year. Central Bank governor had said in his latest media appearance that inflation was not structural and its causes were mainly imported.

Growth however would plummet to 1% this year from 7.9% last year, the Bank said, attributing the drop to low agricultural yield.

Exports would increase, driven by a rise in the automotive and phosphates sales, but would still be lower than a heavy import bill due to soaring energy and food prices.

The current account deficit would deepen 4.9% of GDP in 2022 and 3.8% in 2023.

Remittances from Moroccans abroad, after hitting a record level of near $10 billion last year, would stabilize at $8.7 billion this year, while tourism continues its recovery with revenue jumping from $3.4 billion last year to $5.4 billion this year. Tourism is expected to hit pre-pandemic levels starting from next year with an expected revenue of $7 billion.

The fiscal deficit would soar to 6.3% due to higher spending and subsidies cost, partly compensated by a rise in taxes.