By Jamal Boubakri
Washington D.C – Standard and Poor’s (S&P) Ratings Services recently affirmed that its long and short term foreign currency sovereign credit ratings on the Moroccan Kingdom stands at BBB-/A-3 and its long and short term local currency ratings stands at BBB/A-2.
Moreover, the transfer and convertibility assessment for Morocco remains at BBB+. Meanwhile, Standard and Poor’s downgraded Morocco’s outlook from stable to negative.
What factors drive S&Standard & Poor’s ratings?
According to Standard and Poor’s rating report on Morocco, the macroeconomic management approach plays a fundamental role in achieving stability, contributing to a strong economic growth relative to peers, and keeping consumer inflation rate and moderate government debt levels low.
Also, the ratings are influenced by comparatively low prosperity (relative to similarly rated countries), and by social pressures that have increased since the start of the Arab Spring.
In order to balance government budget, Standard and Poor’s recommends that the Moroccan government consider more cuts in subsidies.
The Moroccan government has already taken some bold measures in this regard, by means of passing a part of the fuel subsidy to consumers, as a result of its controversial increase of fuel prices in mid 2012. This subsidy cut is expected to lead to a surplus return in 2013.
Moroccans expect that their government to be more responsible and take political and economic reforms to contain consumer price inflation, to limit popular unrest and to lower unemployment rate by creating more jobs and encouraging investment.
