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Rabat – Bank Al-Maghrib (BAM), Morocco’s central bank, is aiming to push its share of foreign currency reserves for green, social, and sustainable bonds from 7% to 10%, said Abdellatif Jouahti, BAM’s governor on Friday.
Jouahti announced the news during a conference on the “macroeconomic impact of climate change” held in Rabat, an event co-organized with the Central Bank of Spain.
Green bonds – also referred to as climate bonds – are financial instruments used to raise funds for green investments, including projects relating to climate mitigation and adaptation. Similar to usual bonds, the holder of the climate bonds receives a fixed income.
During the conference, Jouahri emphasized BAM’s commitment to making its investment strategy more sustainable, favoring environmentally responsible choices.
BAM initially enacted its green investment strategy in 2016 when the bank invested $100 million in green bonds issued by the World Bank. The investment was announced on the sidelines of the global climate summit, COP22, held in Marrakech.
In 2023, BAM pushed its green agenda further, announcing a $200 million investment in sustainable bonds.
The push towards a 10% target aligns with global efforts to combat climate change, Jouahri said, citing the World Bank’s estimation that Morocco will require approximately $78 billion in investments between 2022 and 2050.
Jouahri emphasized the important role central banks have in considering the impact of climate change on their missions. He noted that climate-related risks could have significant effects on economic variables such as growth, employment, and inflation, thus influencing monetary policy decisions.
The decision to buy climate bonds is the latest in Morocco’s efforts to boost climate financing in the country.
In January of 2023, a report by the Green For South Inc., a Toronto-based consultancy, shed light on Morocco’s climate financing sector. According to the report, Morocco is emerging as a regional leader in establishing channels to finance climate action.
The report also noted that Morocco is the first country in North Africa to adopt “appropriate regulations and guidelines” to support climate finance.
In July 2022, Morocco adopted a climate mitigation plan (NDC) under a budget of $78 billion. Of these, $38 million went into funding mitigation measures while $40 billion went into setting up climate catastrophe warning systems.
In terms of green financial activity, Morocco ranks alongside Egypt, Lebanon, and Turkiye in the group of leading countries mobilizing resources from both global green funds and green bonds.
Read Also: IMF, WB Marrakech Meetings: Morocco’s Central Bank Invests €200 Million in Climate Bonds
