Fitch Ratings: Morocco Among 4 MENA Economies Hardest Hit by COVID-19

Rabat – According to Fitch Ratings, a US-based international credit ratings agency, Morocco is among four of the fourteen Middle East and North Africa (MENA) countries that have recently taken a hard hit to public and external finances and growth.

The downfall comes as one of the many ways COVID-19 and the fall of oil prices have mangled much of the world’s economy.

In addition to Morocco, Fitch also lists Iraq, Jordan, and Oman as being seriously shaken by increasing debt.

Although Morocco has been praised for its proactive and strategic response to curbing the spread of COVID-19, the country has not been spared from accumulating debt in the process.

In April, the World Bank published a report on Morocco’s economic situation, noting the impact of the global pandemic and that demands for external financing have increased.

“The outlook remains subject to significant downside risks, including from more severe and longer duration of the pandemic,” outlines the article.

Morocco already faced challenges reducing the country’s debt which doubled since 2009, reaching MAD 750.12 billion ($78 billion) in 2019. President of the Court of Auditors Driss Jettou pointed out that meeting the country’s goal of reducing debel levels to 60% of GDP by 2021 “would be difficult to achieve.”

The World Bank has assisted Morocco by restructuring a US $275 million Disaster Risk Management Development Policy Loan with a Catastrophic Deferred Drawdown Option.

While the UN organization and Fitch Ratings both note the benefits of lower international oil and butane gas prices, they expect worsening budget deficits and government debt trajectories will continue a downward trend and industries that support Morocco’s GDP are at risk.

Fitch Ratings reports that tourism accounts for 10-20% of GDP across MENA’s non-oil economies. Tourism is one of the driving sectors of Morocco’s economy, accounting for 11% of the country’s GDP.

Since the onset of the pandemic, 87% of Morocco’s hotels have closed, while the National Tourism Confederation (CNT) estimates a near 40% drop in expected industry revenue between 2020 and 2022.

The loss could amount to over $13.85 billion in tourism revenue over the course of two years and amid concerning unemployment rates.

Additionally, the lockdown’s direct impact on net remittances, accounting for 4% to 7% of GDP across Lebanon, Tunisia, Morocco, Jordan, and Egypt, is taking its toll.