Rabat - While Morocco has postponed the launching of its exchange rate regime reform, the International Monetary Fund (IMF) believes the kingdom is ready to make the critical step.
Rabat – While Morocco has postponed the launching of its exchange rate regime reform, the International Monetary Fund (IMF) believes the kingdom is ready to make the critical step.
“Morocco is ready to switch to a flexible regime rate,” declared Nicolas Blancher, head of the IMF consultation mission during a press conference held Monday in Rabat presenting the mission’s conclusions to the Moroccan authorities.
“Reporting the implementation decision [of the reform of the exchange rate regime] is not a problem,” said Nicolas Blancher, head of the mission for Morocco in the IMF’s Middle East and Central Asia department. “Morocco is ready, as we have already said, it is a sovereign and voluntary decision that the Moroccan authorities have taken as part of a long process of integration of the country into the world economy.”
Morocco has been working with a technical mission from the IMF on liberalising its currency regime “after a drop in global oil prices helped strengthen its public finances,” believes the IMF.
“We do not believe that Morocco is exposed to any particular risk. After our studies, especially the stress-test, we found that the financial system is resilient and there is no reason to devalue the dirham,” Blancher said.
With a current account deficit expected to fall to 4 percent of GDP in 2017, gross international reserves will are forecasted to settle around USD 24 billion by the end of 2017, covering about 6 months of imports in terms of foreign currency, according to the IMF. In this sense, Blancher believes that the exchange rate regime reform will bring stability to the Moroccan economy, allowing it to react and resist shocks.
“The IMF supports the easing of the exchange rate regime that the authorities intend to pursue gradually and which will enable the Moroccan economy to better absorb external shocks and remain competitive in the future.”
Blancher pointed out that most of the countries that initiated this process have done so in a state of crisis, under duress and pressure. “In the case of Morocco, it is the opposite, it is in a position of strength,” he emphasized.“There is no misalignment of the dirham, and there is no fundamental reason for the dirham to be depreciated,” despite the decrease in foreign exchange reserves.
Regarding the reasons for the postponement of implementation of the reform, Blancher remained cautious. “We must ask the question to the Moroccan authorities.”
He added that the IMF remains neutral with respect to this reform.
On July 1, head of government Saad Eddine El Othmani publicly dismissed speculation about any issues in the implementation of dirham liberalization reform, denying reports that one of the reasons of the delay was the rush on currency by commercial banks, which drained USD 4.4 billion from the foreign currency reserves in two months.