The North African country is considering the move to offset the economic shock caused by COVID-19.
Sarajevo – As the spread of Covid-19 impacts economies across the globe, Morocco is considering tapping into a $3 billion precautionary liquidity line with the International Monetary Fund (IMF).
This would be Morocco’s first time drawing funds from the credit line, which the IMF made available in 2018. If Morocco decides to proceed, the move will still require IMF approval.
The Moroccan government recently removed the limit on foreign borrowing, given the novel coronavirus’ damaging consequences on the national economy. Economists predict that Morocco’s initial budget in international borrowing will likely double, which is the case in many nations across the world.
The pandemic has hit Morocco’s tourism sector the hardest, causing an unprecedented drop in foreign currency earnings.
Cutting spending, as some neighboring North African nations have done, could prove a controversial move and ignite social unrest. This was the case in Algeria.
While the Ministry of Finance has yet to release a statement on this matter, finance minister Mohamed Benchaaboun assured the public that Morocco is equipped to mitigate immediate coronavirus impacts.
Increasing spending on social protection and implementing measures that help maintain jobs, Morocco is helping its most vulnerable citizens, those operating within the informal sector.
When the country imposed a lockdown to slow down the spread of the virus on March 20, issuing a stay at home order and prohibiting inter-city travel, Morocco’s informal workers were left without a source of income due to the confinement.
In response, the Moroccan government introduced measures to provide food security and a monthly stipend for living expenses to families and individuals working in the informal sector.
All formal and informal workers who can prove the suspension of their activities can qualify for the assistance. Interested should apply online rather than travel to administrative headquarters, as a precautionary measure, the Ministry of Interior stressed in a March 30 statement.
King Mohammed VI decided today, April 8, to suspend rent payments for tenants of Islamic Endowment premises. The measure will benefit hundreds of thousands of tenants across the country, particularly in cities with bustling medinas (old cities) such as Fez and Rabat, whose livelihoods depend on handicrafts, trade, and other private and informal sector services.
The King ordered the creation of the Special Fund for the Management and Response to COVID-19 on March 14 as part of a national campaign to mitigate the social and economic impacts of the outbreak. The fund was created with a sum of $1 billion, and has since more than tripled thanks to contributions from public and private sector institutions and individuals.
American credit rating agency Fitch Ratings expressed confidence in a March 16 report that Morocco’s economy will overcome the challenges posed by the pandemic, despite a significant COVID-19-related increase in Morocco’s current account deficit and external finances.