Some credit categories recorded an increase in lending rates, but all institutional sectors recorded a decline.
New York – Morocco’s average lending rate dropped by 29 points in the second quarter of 2020, Bank al-Maghrib revealed in a note on Wednesday. The decline translates to an overall weighted average rate of 4.58%, down from 4.87% in the first quarter of 2020.
Part of the decline is due to a drop in lending rates for credit cash flow facilities, to 4.41% against 4.64% in the previous quarter. Rates for equipment loans also factored in, falling to 4.21% against the first quarter’s 4.52%.
Other credit categories registered an increase. The rate for real estate loans rose to 5.22% from 5.16%. The consumer loans rate came to 7.09%, against 6.75% in the previous quarter.
By institutional sector, Bank al-Maghrib recorded a decline in lending rates across the board.
Loans to individuals saw an 11 point decrease, to 5.53% in the second quarter against 5.64% in the first quarter. Rates to non-financial companies registered a 26 point decline, to 4.44% from 4.70%.
Private non-financial companies saw the greatest declines in lending rates, dropping 36 points overall, to 4.44%, against 4.80% in the previous quarter.
The decline is partially due to a 28 point drop in rates for large enterprises, to 4.14% against the first quarter’s 4.42%.
Meanwhile, loans to micro-, small- and medium-sized enterprises factored into the overall decline with a 65 point decrease. This translates to a drop to 5.18%, Bank al-Maghrib noted. The rate was 5.83% in the first quarter of 2020.
The developments come as Morocco continues to grapple with the economic fallout caused by the COVID-19 crisis.
Morocco has received wide recognition for its strong and rapid response to curbing the spread of the virus. However, the suspension of economic activities is hitting the country hard, especially in the tourism sector.
Prolonged drought and global recession are set to further exacerbate the economic crisis, economy minister Mohamed Benchaaboun stressed on July 23. The minister warned that the country expects economic growth to slow by 5% in 2020, marking a rate not seen since the late 1990s.
The General Treasury of Morocco registered a $3 billion budget deficit in the first half of 2020.
Despite the harsh outlook, Bank al-Maghrib said in a recent report it has no “particular concerns” regarding the country’s financial stability as it works towards an economic recovery.
The report emphasizes the strong and coordinated response by Morocco’s financial authorities to monitor risk indicators, and to respond appropriately and proportionally to the pandemic’s economic impact.