Moroccan Bond Market Stabilizes Amid Controlled Inflation, Ample Liquidity

Agadir – The Moroccan bond market maintained its steady recovery during the third quarter of 2025, benefiting from an economic environment characterized by controlled inflation and substantial liquidity, according to a recent analysis by Attijari Global Research (AGR).

AGR notes in its report that inflation averaged just around 1% over the first nine months of 2025, which has allowed Bank Al-Maghrib (BAM) to keep its inflation forecasts for the year unchanged.

This stability has provided favorable conditions for bond market operations, helping to boost investor confidence while allowing the treasury to finance its operations efficiently.

At the same time, Morocco’s public finances present a mixed picture of stability and challenge. By September 2025, the ordinary balance – which measures the difference between the government’s recurring revenues, mainly taxes, and regular expenditures such as salaries and basic public services – stood at MAD 29 billion ($3.16 billion), indicating that the government’s day-to-day operations remain financially sound.

However, the overall budget deficit widened to MAD 52.8 billion ($5.76 billion), up from MAD 35.6 billion ($3.88 billion) a year earlier.

A deficit reflects the total gap between all government spending and revenues, including extraordinary or one-time expenditures such as major infrastructure projects or public investment programs.

AGR explains that this widening deficit is primarily due to spending growth outpacing revenue, despite strong tax collection and a reduction in the compensation burden.

The compensation reduction refers to lower government spending on subsidies for essential goods, which has partially offset the increase in other expenditures.

Despite this high deficit, Morocco has already covered nearly 93% of its projected 2025 financing needs, equivalent to MAD 71.7 billion ($7.82 billion) of the MAD 77.1 billion ($8.41 billion) required, with external borrowing remaining a central part of the financing strategy.

This approach, combined with controlled inflation, has contributed to high liquidity in the money market. Daily investments average MAD 15 billion ($1.64 billion), providing the treasury with a strong and flexible financial position.

The current market conditions have also influenced treasury debt management. The Moroccan government is gradually shifting its bond issuance strategy towards medium-term maturities, extending the portfolio duration and smoothing repayment schedules after the record maturities observed in 2023.

Overall, the combination of controlled inflation, abundant liquidity, and strategic debt management continues to support the Moroccan bond market, ensuring that the Treasury can meet financing needs while maintaining investor confidence and market resilience.