Morocco rules out drawing on IMF credit line, eyes gradual currency reform

Morocco has no plans to tap funds available under its Flexible Credit Line (FCL) arrangement with the International Monetary Fund, Finance and Economy Minister Nadia Fettah Alaoui said.

The IMF approved a new two-year FCL agreement for Morocco on April 2, 2025, worth 3.45 billion Special Drawing Rights (SDRs), or about $4.5 billion, replacing a previous $5 billion deal signed in April 2023.

Fettah Alaoui stressed in an interview with Sky News Arabia that the facility serves as a precautionary measure against external shocks, not as a source of project financing or deficit coverage.

“Even during the 2022–2023 crisis, marked by high inflation and a significant deficit, we did not use it,” she said.

The minister highlighted Morocco’s commitment to fiscal discipline and reform continuity amid global volatility, noting that the credit line provides “insurance and stability” for ongoing economic programs.

Fettah Alaoui also welcomed Morocco’s recent return to investment-grade status by Standard & Poor’s after 18 months on a positive outlook.

She said the upgrade is expected to broaden the investor base rather than significantly reduce borrowing costs. “This will attract investors who could not previously invest in non-investment-grade countries,” she added.

On monetary policy, Fettah Alaoui praised Bank Al-Maghrib’s efforts to curb inflation, which fell from a peak of 13% in February 2023 to below 1% in 2024, with a target of staying under 2% in the coming years.

She said maintaining price stability remains a priority as Morocco prepares for the next phase of its exchange rate flexibility reform, emphasizing the need to ready financial institutions and SMEs before moving forward.