Georgieva will likely meet with the Minister of Economy to discuss taxation, corruption, and the flexibility of the dirham.
Rabat – The new managing director of the International Monetary Fund (IMF) Kristalina Georgieva is expected to tour the Maghreb in the coming days, with Morocco set to host high-level meetings on February 19.
The agenda of the IMF visit has not yet been revealed, but Georgieva will likely meet with Morocco’s Minister of Economy Mohamed Benchaaboun and the wali of Bank Al-Maghrib, Abdellatif Jouahri.
Georgieva’s arrival may help Morocco prepare for the annual meetings of the IMF and the World Bank, scheduled for October 2021 in Marrakech.
Morocco expects to renew the Precautionary and Liquidity Line (PLL), an instrument that provides financing to countries with sound economic policies. The PLL is intended to serve as insurance and to help resolve financial crises.
The IMF published a report on January 28 reviewing the economic and financial situation in Morocco under the PLL.
The report noted the successes of four PLL arrangements in Morocco since 2012, noting stronger macroeconomic resilience, economic growth, and inclusion.
However, “economic growth, below 3 percent, is not robust enough and unemployment remains high, especially among the youth and women,” the report continues.
“Morocco needs to step up reforms to further enhance its macroeconomic resilience, build buffers, and move towards more private sector-led, inclusive and job-rich growth.”
The IMF report listed Morocco’s priority areas as including taxation; public governance and the fight against corruption; social spending to reduce inequalities; labor market and education reforms; and greater exchange rate flexibility.
Morocco first introduced a floating exchange rate in January of 2018, increasing the rate from 0.03% to 2.5%.
In a floating rate system, a currency’s value is typically determined by supply and demand on the open market. The value of a currency over time is an indication of the country’s relative economic strength.
Prior to 2018, Morocco’s currency operated on a fixed exchange rate. In a fixed exchange rate, a currency held at the same value relative to a major world currency such as the US dollar or the Euro.
The flexibility of a floating rate offers an advantage in case of an economic shock where significant pressure is put on foreign exchange reserves.