Despite the numerous challenges of 2020, Moroccan response to the crisis is deemed “appropriate.”
Agadir – The International Monetary Fund (IMF) has congratulated the Moroccan government on its COVID-19 response, saying that the country’s containment strategy was “prompt” and “appropriate.”
The IMF’s comments came in its 2020 Article IV Consultation Staff Report, published on January 5 and concerning obstacles and achievements in Morocco.
The report summarizes challenges that the Moroccan government and people faced at height of the pandemic-induced crisis. According to the report, “the pandemic has exerted a heavy toll on Morocco’s population… Its economy has also been hit by a severe drought that affected agriculture output.”
Despite this, the document added, the prompt response of Moroccan authorities helped minimize the social and economic impact of the COVDI-19 crisis.
With the Moroccan government appearing determined to continue tackling both the pandemic and the lingering effects of the drought season, the IMF expects Morocco to gradually recover in 2021.
In a press release, the IMF predicted Morocco’s “GDP growth to fall to 7.2 percent in 2020 and rebound next year to 4.5 percent.” It also welcomed the measures Morocco’s Bank Al-Maghreb (BAM) adopted to reduce the “impact of the pandemic on financial markets and the real economy.”
According to the IMF’s Staff Report, Morocco faces four key issues: the impact of COVID19; various policy challenges; post-COVID19 reform agenda; and the Post-Program Monitoring (PPM).
Despite Morocco’s successful handling of COVID19, the IMF is worried that “the recent rise in COVID-19 cases, both in Morocco and its main trading partners, suggests that [the prediction of a gradual recovery] remains subject to significant downside risks.”
For the IMF, Morocco needs a delicate balancing act “between sustaining the still fragile economic recovery and rebuilding the policy buffers used in response to the crisis.” This will require a careful and well-planned approach to policy enactment for 2021.
Morocco’s post-COVID19 reform agenda includes structural reforms, emphasizing how Moroccan authorities have given adequate priority to the reform of the social protection system, as well as the reform of State-Owned Enterprises.
The IMF also highlighted the need for “Continued efforts at implementing the education reform.” It particularly called for “measures to increase domestic competition, improve the digitalization of public administration, and implement the anti-corruption strategy would enhance the business environment and boost productivity and growth.”
The financial institution also commented on the expiration of the Precautionary and Liquidity Line (PLL). The purchase of all available resources in April, 2020 helped to ease external financial pressure, while maintaining the official reserves in line with IMF suggestions.
Economic downfalls, ‘appropriate’ governmental policies
Even as it pointed out various shortfalls, the IMF’s thorough study of the economic and financial situation in Morocco maintained a generally optimistic outlook towards governmental policy.
“The financial system has so far weathered the crisis relatively well, helped by the strong response by BAM,” reads part of the IMF’s evaluation of Morocco’s economic performance in recent months.
The report also discusses the effect of the pandemic on Morocco’s “external position,” noting the weak demand for products among trading partners, particularly in Europe, leading to reduction in both imports and exports.
Overall, the directors at IMF commend Morocco’s response to the pandemic and its consequences, while maintaining the importance of close monitoring of the financial and economic situation within the country.