By suspending the distribution of profits to shareholders, credit institutions will hold on to sufficient capital amid the COVID-19 crisis.
Rabat – Morocco’s central bank, Bank Al-Maghrib, has called on credit institutions to suspend all distribution of dividends, or shareholder profits, for the 2019 financial year until further notice due to the COVID-19 pandemic.
In a press release, Bank Al-Maghrib said credit institutions must strengthen their role in financing the economy during the crisis.
Credit institutions must also retain sufficient capital to face the crisis and preserve their ability to provide financing.
The Moroccan central bank adopted on March 29 a set of monetary and prudential measures to facilitate access to bank credit for the benefit of both households and businesses. The measures also assist financial institutions in Morocco, focusing on their levels of liquidity, equity, and solvency.
The policies support access to loans and triple commercial banks’ refinancing capacity, or the ability to get new loans with lower interest rates, with the Moroccan central bank.
Bank Al-Maghrib also offers banks financial instruments in Moroccan dirhams and in foreign currency. The central bank accepts a wide range of securities from commercial banks in exchange for refinancing and extending the duration of loans.
Morocco’s central bank said it will continue to closely monitor the economic impacts of the COVID-19 pandemic and will take the necessary steps to address challenges.
The measures come as Morocco’s economic outlook grows increasingly bleak due to the devastating economic and social impacts of COVID-19.
The High Commission for Planning (HCP) predicted at the end of April that Morocco’s economic growth will decline by 8.9 points in the second quarter of 2020, representing a potential overall loss of approximately $2.89 billion due to the stagnation of economic activity under the state of health emergency.
Faced with a drop in foreign demand, the HCP expects Morocco’s exports of goods and services to decline by 6.1%.
The HCP also forecasted an ongoing decline in terms of investments, representing a rate of -26.5% compared to the second quarter of 2019. The outcome would reduce GDP by 6.8% in the second quarter of 2020.
As the financial arms of the Moroccan government work to implement measures to protect Moroccan businesses and households, the country eagerly anticipates the end of the nationwide lockdown, set to lift on May 20, and the gradual resumption of regular economic activity.