IMF: Moroccan Banks Continued to Thrive Despite COVID Crisis

The mission chief of the International Monetary Fund (IMF) in Morocco, Roberto Cardarelli, said on December 10 that Moroccan banks have resisted the COVID-19 crisis, continuing to strive despite the deep socio-economic fallout of the global pandemic.

Cardarelli, who was leading an IMF team in Morocco between November 30 and December 10 to assess the country’s economic performance in the past year, made the statements during a video conference to present the findings of the IMF staff’ annual mission assessment of the country’s economic policy and prospects.

He explained that the speed and extent of support provided by Bank Al-Maghrib (BAM) allowed Moroccan banks to withstand the far-reaching economic repercussions of the COVID crisis.

Cardarelli said that “Bank Al-Maghrib (BAM) kept its policy rates unchanged and maintained its wider liquidity provision to support the banking sector.”

The IMF mission chief in Morocco further expressed his team’s satisfaction with the decision of the Moroccan Central Bank to end most of the prudential measures adopted to support the banking sector during the pandemic.

“Staff supports the accommodative monetary stance, especially as inflationary pressures remain contained and inflation expectations well anchored,” Cardarelli said. “The recent appreciation of the dirham and the uncertainty over the transitory or persistent nature of these pressures, provides a good opportunity for accelerating the transition to an inflation-targeting (IT) framework.”

The IMF mission chief also noted that the central bank should continue to ensure that banks continue to make provisions for bad loans, while accelerating the launch of reforms to create a secondary market for delinquent loans.

In addition, he suggested, Moroccan authorities should finalize the legal reform project to provide a more robust framework for bank resolution.

Cardarelli spoke of “the authorities’ determination to implement the structural reforms proposed as part of the New Model of Development (NMD),” stressing the vital potential of these reforms “to yield a stronger, more inclusive, and sustainable growth path for Morocco.”