Rabat - Standard and Poor’s Ratings confirmed Morocco’s credit rating BBB-/A-3 last Friday due to forecasted improvements in the kingdom’s external and fiscal deficits, according to a new report by Reuters.
Rabat – Standard and Poor’s Ratings confirmed Morocco’s credit rating BBB-/A-3 last Friday due to forecasted improvements in the kingdom’s external and fiscal deficits, according to a new report by Reuters.
The agency said its outlook for the economy looked “stable” as the net-energy importer continues to benefit from two years of low oil prices – unlike its fellow North African petrostates.
S&P also said it was optimistic that public finance reforms would proceed and that current account deficits would see sizeable reductions.
The biggest point of concern remained the economy’s vulnerability to volatilities in the agricultural sector, which employs nearly 40 percent of the Moroccan workforce.
Last month, Moody’s released a report that stated it expected Morocco’s banks to remain profitable due to stable funding and the country’s “sound” economy, despite the high credit risk they face.
“Nonperforming loans (NPLs) for Moroccan banks have increased to 7.7% of gross loans as of Q1 2016, but we expect them to stabilize,” says Olivier Panis, a Vice President and Senior Credit Officer at Moody’s. “Retail sector NPLs have already stabilized at around 8.1% as of Q1 2016 and reducing share of doubtful and watch list loans points to a slowing trend in NPL formation.”
Cheap sources of fuel, as well as a growing reserve of hard currency, a rise in foreign direct investment, and a marked increase in remittances, have prevented the national budget from tanking in 2016, despite troubles in the agricultural sector in the first half of the year.
In April, weak agricultural output caused by the absence of rainfall led S&P to halve its expectations for economic growth in Morocco for 2016 from 4.5 percent to less than two percent.