The IMF said Morocco must improve its education system, the functioning of the labor market, and the business environment to achieve its medium-term aspirations.
Rabat – The International Monetary Fund (IMF) has praised Morocco’s improved fiscal management and economic diversification which have strengthened its economy. However, unemployment remains high, especially among the youth.
The IMF published an end-of-mission press release on Tuesday of an IMF staff team visit to Morocco from March 19 to April 3.
The team, led by Nicolas Blancher, met Moroccan authorities for the IMF’s required “2019 Article IV consultation” as well as the first review of the Precautionary and Liquidity Line (PLL) arrangement between Morocco and the IMF approved in December 2018.
Blancher stated that “the Moroccan economy continues to benefit from the prudent macroeconomic policies and structural reforms that have been pursued.”
He added that Morocco should implement structural reforms to “increase productivity gains, create jobs, and raise growth potential, in line with the government’s medium-term objectives.”
In order to achieve the objectives, the IMF advised that Morocco improve the quality of education, the functioning of the labor market, female labor force participation, and the business environment.
According to the report, Morocco’s economy grew 3 percent in 2018, while inflation rose 1.9 percent and government debt growth remained steady at 3.3 percent. Morocco’s reserves of international currency remained “comfortable,” sufficient to buy five months worth of imports.
The team predicted that economic growth should stabilize in 2019 to reach 4.5 percent over the medium term with the implementation of structural reforms. However, the forecast “remains subject to risks related to lower growth in advanced and emerging economies, world energy prices, and volatility in the global financial markets.”
The IMF staff team approved of Morocco’s gradual transition from a regulated currency exchange to a more flexible exchange rate, which the IMF believes will improve the economy’s ability to absorb external shocks and maintain its competitiveness.
The IMF attributed Morocco’s business environment growth to the activation of the Competition Council and the implementation of a new financial inclusion strategy to promote competition and support small and medium-sized enterprises.
Morocco improved its governance, the efficiency of the public sector, and combating corruption by adopting a law on access to information and publishing its first report on the implementation of the national anti-corruption strategy, concluded the press release.
The fund also emphasized the need to better target social programs to improve their impact and reduce social inequalities.