Rabat- In 2014, the Moroccan economy made important developments in maintaining macroeconomic stability in a difficult environment, thanks to "strong policy actions" implemented by the authorities, International Monetary Fund (IMF) said in a statement issued at the end of its regular consultations with the kingdom under Article IV.
Rabat- In 2014, the Moroccan economy made important developments in maintaining macroeconomic stability in a difficult environment, thanks to “strong policy actions” implemented by the authorities, International Monetary Fund (IMF) said in a statement issued at the end of its regular consultations with the kingdom under Article IV.
The IMF commended the Moroccan authorities for their “strong policy actions which have reduced economic vulnerabilities despite a difficult environment.”
The financial institution said that growth slowed in 2014 as a result of a contraction in agricultural activity following an exceptional 2013 crop and weak demand from Europe. However, growth is expected to rebound in 2015 to about 4.4 per cent and remain robust in the medium term as external demand and domestic confidence strengthen.
In this regard, IMF added that the measures taken by the government to modernize the agricultural sector, continued expansion of Moroccan companies into new markets, the rise and growth of new sectors such as aerospace and automotive industries, as well as increased investments in infrastructure and human resources “should promote the growth rebound.”
Inflation has remained low and the financial sector remains sound. The 2014 current account deficit narrowed to an estimated 5.8 percent of GDP due to booming exports from newly developed sectors and lower oil prices. International reserves increased to above 5 months of imports. The 2014 fiscal deficit was also reduced to 4.9 percent of GDP.
The Fund also noted that the business climate in Morocco has improved, saying that the kingdom moved 16 positions in the 2015 World Bank’s Doing Business Report, which measures the costs to firms of business regulations. The kingdom is now ranked 71 out of 189 countries around the world.
Morocco won five places in the 2014-2015 Global Competitiveness Report. The IMF said that this is due to the country’s social and political stability and its efforts to diversify the economy and to modernize the business environment in recent years, as well as reducing the budget deficit between 2012 and 2013.
The IMF has also praised the “strong policy actions” implemented by the Moroccan authorities to reduce vulnerabilities.
“These include significant progress to eliminate the cost and fiscal risks associated with energy subsidies by removing all subsidies on liquid petroleum products while extending programs to support the most vulnerable populations, and a strengthening of their economic and financial policies framework (e.g., new banking law, new organic budget law),” it added.
A 24-month Precautionary and Liquidity Line (PLL) in the amount of $5 billion was approved for Morocco by the Executive Board of the IMF on July 28, 2014.