Rabat – The International Monetary Fund (IMF) has emphasized that Morocco is “ready” to move towards a flexible exchange rate regime. While calling for the implementation of the dirham liberalization reform as soon as possible, the organization admitted that ultimately, “the decision is up to the Moroccan authorities.”
Visiting the kingdom from October 25 to November 7, the IMF delegation led by it’s president Nicolas Blancher, could not be more explicit about Morocco’s need to urgently implement a flexible exchange-rate regime.
For the first time, Blancher made a direct recommendation for dirham liberalization reform, in both an official online statement on Tuesday, November 7 and in a press conference in Rabat.
“The mission fully supports the authorities’ intention to progressively ease into the exchange rate regime, which should make the economy better able to absorb external shocks and preserve its competitiveness. The current situation continues to provide a window of opportunity to begin this transition in a gradual and orderly manner. It would be appropriate to initiate this process as soon as possible,” Blancher wrote.
While his communique couldn’t be more clearer, during his press conference, Blancher made sure to remain diplomatic, stressing that “the decision is up to the Moroccan authorities.”
Blancher explained that while in the short term, the postponement of the reform “doesn’t really have an economic or financial impact on Morocco,” since the dirham is currently stable, “it is in the medium term” that positive or negative effects are expected.
But as Morocco has decided on a gradual and orderly implementation of the process, for Blancher, “there is now a window of opportunity that should be seized immediately.”
Jihad Azour, director of the IMF’s Middle East and Central Asia Department, also believes that there is no reason to wait. Still, he is as cautious as Blancher by stressing that “the decision to implement this regime is sovereign.” It must be, according to him, “made by the government.”
The director, who presented the IMF’s regional economic outlook for the Middle East and North Africa on November 2 in Rabat, also discussed the impact of rising growth rates on the social sectors.
For Azour, if Morocco wants to gradually amend unemployment, its economic growth rate “should reach around 6 percent.” Quite the optimistic rate, seeing that in its latest prevision, the IMF set this very same to an estimated 4.2 percent for 2017, while forecasting its decline to 3.8 percent for 2018.
How can that be achievable? According to the director, “there are many things that need to be done to increase growth.” And for Azour, the first answer would be to “seek foreign financing in order to integrate new markets.”
