The decision adds to BAM's set of measures to mitigate the negative repercussions of the COVID-19 crisis on Morocco's economy, which was the main focus of the board meeting.
Rabat – The Moroccan central bank, Bank Al Maghrib, (BAM) proceeded on Tuesday to reduce the key rate by a further 50 basis points, lowering it to 1.5%.
The decision came during BAM’s second quarterly board meeting of 2020.
The reduction follows a 25-basis-point cut to the key rate last March, aiming to “fully liberate the reserve account in favor of the banks,” said BAM in a statement on June 16.
The decision adds to BAM’s set of measures to mitigate the negative repercussions of the COVID-19 crisis on Morocco’s economy, which was the main focus of the board meeting.
In addition, BAM set out measures with the objective of refinancing bank credit to participatory banks and microcredit associations.
The BAM decisions add to the measures to ease financial burdens during the crisis that the government has already implemented, such as facilitating the improved eligibility of refinancing operations. These measures aim to alleviate the negative impact of the COVID-19-induced economic crisis.
The meeting addressed the downgrade of the inflation rate to 0.9% in the month of April, which is mainly linked to the “decrease in the prices of fuels and lubricants.”
The central bank expects the inflation rate to remain at a moderate level in 2020 and 2021, approximately 1%.
BAM expects the Moroccan economy to decline by 5.2% during 2020, making it the most significant drop since 1996. On the other hand, the Bank expects growth to rebound to 4.2% in 2021, accompanied by an increase in the agricultural added value by 12.4%.
The COVID-19 pandemic’s negative repercussions on the economy also impacted employment with over 726,000 jobs losses, representing 20% of manpower in structured businesses, according to the statement.
BAM expects tourism revenue to reduce by 60% and remittances of MREs by 25%, which will likely be followed by a rebound of 5.2% and 60%, respectively, in 2021.