S&P maintains Morocco’s rating at BB+/B with a stable outlook

Credit rating agency Standard & Poor’s Global Ratings has maintained Morocco’s sovereign credit rating at BB+/B with a “stable outlook”, attributed to the country’s ongoing structural reforms that will support robust economic growth.

“The stable outlook on Morocco reflects our expectation that ongoing structural reforms will support robust economic growth and help counterbalance external and budgetary pressures”, the credit rating agency pointed out in a report titled “Morocco ‘BB+/B’ Ratings Affirmed; Outlook Stable.”

“Morocco’s ongoing economic and fiscal reforms should pave the way for more inclusive growth, increased domestic and foreign private investment, and a gradual reduction in external and budget deficits,” the report underlined.

The New York-based agency said that “the Moroccan economy has weathered several regional and global shocks over the past two decades while maintaining access to external and domestic financing.”

S&P Global Ratings pointed to “robust growth prospects, supported by ongoing structural reforms, economic diversification, and public and private investment.”

The agency forecast a steady rise in Morocco’s GDP to 3.5% in 2023 and 3.4% a year in 2024-2026.

“Our projections suggest that inflation will become more broad-based and will decelerate gradually to 4.5% in 2023 and 2% by 2026,” it added.

“We forecast that Morocco’s GDP will rise by 3.5% in 2023, bolstered by a rebound in agricultural output and robust performance by the country’s main export-oriented sectors, including tourism, phosphates, automotive, and aerospace.”

“Morocco’s economic growth will benefit from the completion of additional large-scale projects, the expansion of Morocco’s export capacity, the promotion of the private sector, and the implementation of socioeconomic reforms,” the report stressed.

“A series of business-friendly reforms seeks to prioritize investment in digitalization and the modernization of the legal, institutional, and regulatory framework”, the agency noted, adding that the Investment Charter, amended by the government at the end of 2022, “aims to increase the share of both domestic and foreign private investment to two-thirds of total investment by 2035, from approximately one-third currently”.

“The authorities have also embarked on a comprehensive overhaul of the social security system to extend health care coverage and increase social transfers, while broadening the tax and social contribution bases,” the report said.

Morocco’s GDP per capita will rise to nearly $5,000 in 2026 from around $4,000 in 2023, S&P said, stressing that the rating remains low in comparison to the other countries.

The rating agency also argued that Morocco’s low per capita income reflects the country’s “persistent structural weaknesses, large informal economy, and wide income disparities between more- and less-developed areas.”

The agency noted that it may upgrade Morocco’s credit rating if budgetary consolidation proves to be “significantly faster than expected,” resulting in a significant decrease in net general government debt to GDP.