By Loubna Flah
By Loubna Flah
Morocco World News
Casablanca, December 19, 2012
Morocco seems once again drawn down the spiral of Structural adjustments Programs (SAP) set by the International Monetary Fund. The IMF deems it urgent for Morocco to implement structural adjustments in order to pull through the current economic conjuncture and to maintain fiscal balances, as reported by the Moroccan daily Al Massae.
The IMF usually sets conditions for getting loans or for obtaining lower interest rates on existing loans known as Structural Adjustment Programs (SAP). These conditionalities constitute a safeguard ensuring that the money lent will be spent on the loan goals established a priori by the borrowing country.
The SAP received worldwide criticism for their compelling measures, namely austerity policies that entail a cut down in public finances in vital sectors, such as education and healthcare. SAP can also lead to sluggish economic growth, as well as economic stagnation.
Nevertheless, the IMF makes it clear that the $ 6, 2 billion precautionary line offered to Morocco is by no means the harbinger of an actual crisis.
The Precautionary and Liquidity Line (PLL) is intended to provide borrowing countries with financing in order to meet actual or potential balance of payments. The PLLL is also intended to serve as insurance to help resolve crises under unpredictable situations.
Though sounding a reassuring tone, the IMF officials reiterated their demand to the Moroccan government to put forward structural reforms as soon as possible.
Mr. Jean François Devanne who presided the latest IMF commission to Morocco said that “despite the measures undertaken and the improvements achieved, the government still needs to make more efforts to reduce unemployment rate especially among youth, to improve social indicators and to guarantee an equal access to basic services, such as education and healthcare”.
Mr. Devanne suggested also that the Moroccan government undertake to reform the job market and improve the investment environment to appeal to foreign investors.
He added that its “pivotal for Morocco to capitalize on maintaining its fiscal balances through the reform of the social protection system, as well as the empowerment of Human resources and the renovation of the infrastructure.”
The IMF warned Moroccan officials against the repercussions of the actual management of the compensation fund. According to the IMF, the compensation fund falls short from providing an even support to the most needy besides its crippling effect as far as public finance is concerned.
On the other hand, the IMF praised the measures undertaken by Morocco’s central bank, Bank Al Maghreb, in order to contain the liquidity strain. The IMF exhorted Bank al Maghreb to keep the banking system at check through continuous monitoring.
It is noteworthy that the popularity of the IMF financial policies has suffered a fatal blow in many parts of the world. The conditionality of its standby agreements and Structural Adjustment Programs led many countries into deep recessions, mainly because of the cuts it imposes on public spending. Needless to say that these austerity measures are likely to undermine the indebted nations’ sovereignty and to alter the quality of life of their citizens.
