Rabat – Morocco plans to begin the dirham liberalization process in June, putting forward the timetable for an essential part of the Kingdom’s economic reform program, the central bank governor said on Tuesday.
Abdellatif Jouahri said the process will be progressive and that it could take up to 15 years to achieve total dirham flexibility.
North Africa’s biggest energy importer, Morocco has been working with the International Monetary Fund on liberalising its currency as its finances have strengthened, helped in part by lower global oil prices.
Morocco had so far announced that the reform of the exchange rate regime would be implemented in the second half of 2017. Finance Minister Mohamed Boussaïd said on Tuesday that the current firmness of the dirham has allowed for the advancement of the timetable as desired by the central bank.
“We will launch the first phase of dirham liberalization in the second quarter,” Abdellatif Jouahri said during a meeting of finance ministers in the region in Rabat. “I can not tell you how long each phase will be, it will depend on the market.”
The dirham exchange rate is currently based on a currency basket weighted to 60% in euros and 40% in dollars. On Tuesday, one dollar was equivalent to MAD 10.03.
Last year, sources said it was a question of broadening the fluctuation bands of the currency by about 5% in 2017.
Morocco, the main importer of energy in North Africa, recorded a trade deficit of MAD 45.47 billion in the first three months of the year. This represents an increase of 20.6% year on year, according to published data Tuesday.
Many international firms and organization predict a successful transition of the liberalization of the Moroccan currency, the resulting improvement to exchange rate flexibility will help Morocco in its strategy to become a manufacturing and export hub between Africa and Europe. According to the Fitch Group, this is due to “a strong fiscal position, low inflation, a sound banking system and the broad alignment of the dirham with macro fundamentals.”
Encouraged by the International Monetary Fund (IMF), Fitch is expressing confidence in Morocco’s ability to move successfully toward a greater exchange rate flexibility.