Morocco & the IMF: Partnership for Progress

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Publication date: October 2020.
Morocco is positioned on the Mediterranean as a bridge between Africa, the Middle East, and Europe.
Economic vulnerabilities: a relatively small, oil- and rain-dependent economy; exposed to external shocks including the global financial crisis of 2008 and the economic fallout from the COVID-19 pandemic.
Structural challenges: slowing economic growth over the last decade and job creation that has not kept pace with an expanding working age population.

Morocco’s relationship with the IMF dates back to 1958.
After the 2008 crisis Morocco worked closely with the IMF to support the economy and prevent another crisis.
In 2012 the Government approached the IMF to access a Precautionary Liquidity Line (PLL) arrangement, a credit facility available only to countries with good macroeconomic fundamentals and sound policies; objective: insure Morocco against economic shocks from abroad.
Minister of Finance Mohamed Benchaaboun (early 2020): the PLL’s purpose “is obviously not for Morocco to draw on this line, but to be able to give more assurance to our partners and lenders--and also demonstrate, if necessary, all the trust the IMF is putting in our country.”
April 2020: Morocco drew on $3 billion from the PLL to help maintain adequate levels of reserves and tackle the sizable social and economic impacts of the pandemic crisis.
The PLL has provided insurance against external risks and inspired confidence among international investors and market participants.

The IMF relationship is characterized by ongoing dialogue and mutual respect, according to Morocco’s Central Bank Governor Abdellatif Jouahri.
Regular interactions:
- Annual meetings between teams from Morocco’s Finance Ministry and Central Bank with IMF staff as part of Article IV consultations.
- Since 2012, more frequent meetings to monitor reforms as part of PLL tracking discussions.
Technical assistance and assessments cited as high quality; Jouahri emphasized work on monetary policy assessments and the Fund’s consideration of Morocco’s positions.
Jouahri’s assessment: the Fund acts as a partner that reports Morocco’s positions honestly to the IMF Executive Board and trusts Morocco to make decisions at the most opportune moment.

Morocco has continued to diversify while weathering external shocks, with growth in phosphates, chemicals, and the auto sector alongside traditional sectors (agriculture, fishing, tourism).
Automotive sector specifics:
- 2018 export value cited as 72 billion dirhams or 7.2 billion euros.
- The sector comprises more than 200 actors.
- Three OEMs with an installed capacity of 700,000 vehicles—making Morocco the leading automaker in the Middle East and North Africa.
- Renault Group: 12,000 employees and 400,000 vehicles produced last year—90 percent exported to more than 70 countries.
- Tangier factory described as the largest automobile factory in Africa.
Policy environment: stability cited as a major factor attracting investment and enabling export growth across the Kingdom.

Minister of Finance Mohamed Benchaaboun: acceleration of economic opportunity “at the level of the African continent” and a desire to strengthen South-South cooperation under the leadership of His Majesty.
Morocco’s role in African agricultural services strengthened by OCP Group:
- OCP founded in 1920.
- OCP is one of the leading exporters of phosphate rock and fertilizers in the world and has turned a strategic gaze southward.
- OCP CFO Ghislane Guedira: the next agricultural green revolution will take place in Africa due to available arable land and potential to increase farmers’ productivity; OCP operates in a sector contributing to food security for a growing population.

Demographics and connectivity:
- About two-thirds of the population is under age 35.
- Morocco has signed more than 50 new free-trade agreements with countries across the globe in the past decade.
Outcomes of IMF collaboration: strengthened macroeconomic resilience, weathering of past external challenges, and support for economic growth.
Remaining policy priorities: tackling long-term challenges such as income inequality and unemployment, which remains high, particularly among women and young people.
Institutional perspective:
- Central Bank Governor Jouahri: international organizations have evolved to focus not only on growth but on inclusive growth and “a better distribution of the fruits of growth.”
- Minister Benchaaboun: His Majesty has embarked on a major reflection on a new development model and calls for a new generation of sectoral programs; for these reforms “the Fund’s support is always desired.”