IMF Commends Morocco’s Strong Response to Recent Global Shocks

Rabat – The International Monetary Fund (IMF) has commended Morocco for implementing a “very strong policy response” that has cushioned the social and economic impact of consecutive global crises over the past two years.

In its most recent country profile, the IMF provided a positive assessment of Morocco’s macroeconomic policies. While risks to stability persist, “continued strong policies” and “rapid implementation” of reforms would support the country’s economic activity in the future, it said.

The IMF further lauded the Moroccan central bank’s recent decision to move to a tighter regime of monetary policies to contain inflation. In 2021, Morocco’s central bank hiked interest rates twice to 2.5% from 1.5%.

In the same assessment, IMF lauded Morocco’s 2023 state budget, arguing that it “strikes a balance” between the needs to reduce the state deficit, mitigate the social and economic impact of consecutive crises, and finance structural reforms.

The assessment further highlights the country’s progress in implementing a series of social reforms. In particular, the IMF “commended” Morocco’s “strong” commitment to implementing “comprehensive structural reforms.”

“The reform of the social protection, health, and education systems would improve fairness and quality of access, better target spending, and sustain human capital in the long run,” the assessment explained.

Noting Morocco’s efforts to transition to a greener economy, the IMF insisted that “continued efforts to reduce dependance on fossil fuels, address water scarcity, and reduce gender inequality are all essential to bolster Morocco’s potential growth.”

In addition, the IMF projects that Morocco’s economic growth in 2023 will average 3%. This performance will be driven mainly by the expected recovery in agriculture input and its positive spillover on the rest of the economy, it said.

Regarding Morocco’s budget deficit – the fiscal difference between a state’s expenditures and income — the IMF argues that it is showing signs of recovery. Despite the rising expenditures from subsidizing basic commodities to preserve the national purchasing power, Morocco’s overall fiscal deficit is estimated to have fallen in 2022.