While the novel coronavirus poses great challenges to Morocco’s economy and society, the country has been making strides in its COVID-19 response.
Rabat – Despite a significant increase in Morocco’s current account deficit (CAD) and forecasted economic stagnation in 2020 due to the COVID-19 outbreak, Minister of Economy Mohamed Benchaaboun is confident the Moroccan economy is resilient enough to withstand the short-term economic impacts of the pandemic.
“In addition to our foreign exchange reserves, which cover more than five and a half months of imports of goods and services, we benefit from the support of our bilateral and multilateral donors,” he said to Moroccan newspaper L’Economiste.
Benchaaboun underlined potential sources of economic support for Morocco as stemming from international financial markets or the International Monetary Fund, if necessary.
The economy minister added that as soon as COVID-19 cases appeared in Morocco, the government took drastic measures to strengthen health infrastructure, preserve jobs, and support the purchasing power of vulnerable households.
The measures prioritize Moroccan lives while ensuring the resilience of economic activity, Benchaaboun explained.
Benchaaboun went on to highlight that COVID-19 has varying impacts on different sectors of the economy. The agro-food, chemical, and telecommunications industries, for example, are expected to maintain their momentum.
The hardest-hit sectors, he concluded, are tourism, air transport, textiles, and automobiles.
Morocco’s pandemic response
To combat the spread of COVID-19, Morocco has suspended domestic and international air travel, maritime links with Europe, land borders with African neighbors, and prohibited inter-city travel.
Only essential businesses such as pharmacies, banks, and grocery stores can continue operations during daytime hours. After 6 p.m., selected pharmacies are the only businesses in operation.
Tourist dollars have dried up, entertainment and leisure spaces have closed, and open-air markets have all but cleared. Many Moroccans are facing economic uncertainty as a result.
To face the looming economic challenges, the Moroccan government established the Economic Monitoring Committee (CVE) on March 11 after confirming the country’s fifth case of COVID-19.
Benchaaboun is chairman of the committee, which develops measures and mechanisms to support the economic sectors directly affected by COVID-19.
The CVE has suspended the payment of social security contributions, postponed tax payment deadlines for large businesses, and launched a program to grant stipends to both formal and informal workers affected by business suspensions and mobility restrictions.
Morocco’s central bank, Bank Al-Maghrib, announced on March 29 its adoption of new measures to leverage the country’s banking system and economy in response to the repercussions of the COVID-19 pandemic.
Bank Al-Maghrib implemented monetary and prudential policies to support access to loans for households and businesses. The measures will triple commercial banks’ refinancing capacity, which is the ability to get new loans with lower interest rates, with the Moroccan central bank.
The central bank is also offering banks financial instruments in Moroccan dirhams and in foreign currency, accepting a wide range of securities from commercial banks in exchange for the refinancing, and extending the duration of the loans.
The central bank measures are also meant to assist the fiscal health of financial institutions in Morocco, focusing on their levels of liquidity, equity, and solvency.
The bright side
While COVID-19 poses great challenges to Morocco’s economy and people, the country has been making strides in its COVID-19 response.
To bolster the national economy against the pandemic, King Mohammed VI ordered on March 15 the creation of the Special Fund for the Management and Response to COVID-19, which has amassed a total budget of $3.5 billion thanks to generous donors. The fund serves to mobilize measures that will stabilize the Moroccan economy and improve the country’s health infrastructure as the novel coronavirus takes its toll.
The Ministry of Economy unveiled the Imtiaz Technologies COVID-19 program on April 1 to meet the high national demand for medical supplies and other essential products.
The Ministry of Health is managing the prices and distribution channels of sanitary supplies to ensure their availability. Exporting medical masks is restricted, and the Moroccan government is accelerating domestic production and authorizing purchases of supplies and COVID-19 testing kits from international actors.
The Ministry of Agriculture affirmed on April 2 that agricultural production and activities will continue regularly, saying the country’s crops “will largely cover the consumption needs of these products during the months of April and May.”
Meanwhile, prices and supplies of consumer goods remain stable, and the Interministerial Committee in Charge of Monitoring Supply, Prices, and Quality is increasing examinations to prevent merchants from exploiting the COVID-19 crisis.
In addition to the government’s economic measures, independent solidarity initiatives have emerged to support Morocco’s vulnerable communities against the economic setbacks and unprecedented restrictions on daily life.
The devastating COVID-19 pandemic has triggered great uncertainty and fear, but Morocco’s unified defense plan should enable the country to weather the socio-economic storm.