Morocco World News
Morocco World News
New York, August 6, 2012
The economic situation in Morocco seems to be going from bad to worse. In addition to a slow economic growth and sluggish prospects of the tourism sector and a poor agricultural campaign because of bad weather conditions, the Moroccan economy suffers from a huge lack of liquidity.
This situation prompted Moroccan authorities to ask the IMF for a precautionary line of credit worth $ 6,2 billion for over two years. The loan, which was approved by the international institution last Friday, is said to be used by the government as “insurance” in case economic conditions deteriorated and it faced sudden financing needs.
But it seems that this line of credit will not suffice to offset the lack of liquidity that Moroccan economy has been facing, especially since the inauguration of the Government of Abdelilah Benkirane seven months ago.
Reuters reported on Sunday that the Moroccan government considers selling sovereign bonds worth at least $1 billion.
“The bond issue will take place this year, probably in October. We can go for at least $1 billion but we may introduce some terms that can allow institutional investors from the GCC (Gulf Cooperation Council) to subscribe for around half the total,” an official who spoke on condition of anonymity was cited by Reuters as saying.
This line of credit will be used to carry out public investments, as well as the reform of the justice system and the Compensation Fund, which subsidies the country’s basic commodities.
“We are not going to the international market because we want to cover expenditure. We want to do it for investment,” the same source was quoted as saying.
While Morocco’s fiscal and current account deficits surged last year to their highest levels in many years, the country’s foreign reserves barely covers 4 months of imports, the lowest since the early 1980s, when Morocco was forced to borrow from the IMF and adopt the restructuring plan, which left a long-lasting negative impact on the country.
Recently, Nizar Baraka, the Minister of Finance confirmed that economic aggregates are almost all in red. The lack of cash reached 75 billion dirhams ($8 billion), while the trade balance deficit reached 99 billion dirhams ($11 billion).