Rabat – Morocco is making notable progress in managing its public debt, according to a new report from the International Monetary Fund (IMF).
With risks deemed moderate, the country’s fiscal policies and structural reforms are driving a sustainable economic trajectory.
Morocco’s debt-to-GDP ratio decreased from 71.5% in 2022 to 69.5% in 2023, the IMF report notes, arguing that this trend was fueled by robust nominal GDP growth of 10%, real growth of 3.4%, and inflation of 6.4%.
Projections suggest the ratio will drop further to 68.3% in 2025 and 65% by 2029, aligning with the Moroccan government’s fiscal consolidation goals.
Increased tax revenues, especially from VAT and corporate taxes, have contributed significantly to narrowing Morocco’s budget deficit, which is expected to decline from 4.3% of GDP in 2024 to 2.9% by 2028.
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These fiscal improvements underpin ongoing reforms designed to bolster economic resilience.
Nonetheless, challenges persist. Gross financing needs rose from 14.6% of GDP in 2022 to 20.6% in 2023, primarily due to heightened debt repayments.
While this pressure is expected to stabilize at 10% of GDP in the medium term, the IMF flags contingent liabilities, such as underfunded public pensions and external debt guarantees, as potential vulnerabilities.
The structure of Morocco’s debt remains a key strength, with long maturities and a relatively low proportion of foreign currency liabilities mitigating exposure to external shocks.
However, rising global and domestic interest rates could increase borrowing costs over the medium term.
To address these challenges, the IMF recommends the adoption of a budget rule anchored on public debt and further strengthening of fiscal frameworks.
Reforms in critical areas such as water, health, and pensions are also essential for ensuring economic resilience in the face of climate change and demographic pressures.
The report coincides with the IMF’s second review of Morocco’s Resilience and Sustainability Facility, which was completed on November 25. The review unlocked $415 million, bringing total disbursements under the agreement to $747 million.
