Rabat – The International Monetary Fund’s (IMF) executive board approved on Monday a two-year arrangement for Morocco to benefit from a $5 billion (MAD 51 billion) Flexible Credit Line (FCL), providing insurance against potential shocks and economic challenges.
The credit line, which Morocco requested in early March, provides nations with “very strong policy frameworks and track records of economic performance with large, upfront access to IMF resources with no ex post conditionality,” the IMF said in a statement.
According to the statement, the IMF approved Morocco’s credit line request in large part because of the country’s “very strong policies, institutional policy frameworks, and economic fundamentals and continued commitment to maintaining such policies in the future.”
The FCL is set to enhance the North African country’s “external buffers” and provide insurance against potential risks on a temporary basis, indicated the IMF, adding that Moroccan authorities intend to treat the arrangement as “precautionary.”
IMF Deputy Managing Director Antoinette Sayeh highlighted Morocco’s “very strong” macroeconomic policies and institutional framework, saying that it has allowed its economy to remain “resilient” in the face of successive shocks throughout the past three years.
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Sayeh referred particularly to the COVID-19 pandemic, the repercussions of the war in Ukraine, as well as environmental challenges, including two droughts.
“Despite this resilience, the Moroccan economy remains vulnerable to a worsening of the global economic and financial environment, higher commodity price volatility, and recurrent droughts,” she said, indicating that the IMF provides countries with protection against these possible risks.
The FCL arrangement will serve as further insurance for Morocco to face these risks over the next 24 months, added the statement, noting that Moroccan authorities will exit the arrangement as soon as the period is over.
Since 2012, the IMF has approved Morocco’s requests for four successive Precautionary and Liquidity Lines (PLL), the last of which expired in April 2020. However, the IMF switched to an FCL arrangement with Morocco owing to the North African country’s strong fundamentals and institutional policy frameworks.
