Press Release: IMF Executive Board Approves US$6.2 Billion Arrangement for Morocco under the Precautionary Liquidity Line
IMF News, August 3, 2012
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Bibliographic details
- Published: August 3, 2012
Arrangement details
- Executive Board approved a 24-month arrangement for Morocco under the Precautionary Liquidity Line (PLL).
- Total approved access: SDR 4,117.4 million (about US$6.21 billion, 700 percent of quota).
- Access in the first year: SDR 2,352.8 million (about US$ 3.55 billion, 400 percent of quota).
- Access rising in the second year to cumulatively US$ 6.21 billion.
Purpose and conditionality
- The PLL will allow the authorities to continue their home-grown reform agenda aimed at achieving rapid and inclusive economic growth.
- The arrangement is intended as precautionary insurance against external shocks.
- Moroccan authorities stated they intend to treat the arrangement as precautionary and do not intend to draw on the line, unless Morocco experiences actual balance of payments needs from a deterioration of external conditions.
Rationale and background
- The PLL was introduced in 2011 to meet more flexibly the liquidity needs of member countries with sound economic fundamentals and strong record of policy implementation but with some remaining vulnerabilities.
- The arrangement is designed to strengthen market confidence and facilitate better access to private capital markets should external risks materialize.
IMF assessment and Managing Director’s statement (Christine Lagarde)
- Morocco has a track record of strong economic policies and wide-ranging structural reforms contributing to:
- robust growth,
- low inflation,
- a resilient banking system.
- These developments, together with strong economic fundamentals and institutional frameworks, have helped Morocco cushion the impact of the global crisis and respond to pressing social needs.
- Identified pressures and responses:
- High oil prices have contributed to a build-up of fiscal and external pressures.
- Authorities have taken action to address these vulnerabilities and are committed to maintaining sound policies.
- Recent increase in domestic administered oil prices signals resolve to reform the subsidy system and to ensure fiscal sustainability more broadly.
- The authorities’ economic program aims to improve social indicators, reduce unemployment, boost competitiveness, and increase the potential for higher and more inclusive growth.
- Authorities will continue to monitor the health of the financial system to preserve its soundness, and to maintain an adequate level of international reserves.
- External risks noted: uncertainties in the euro zone and potential oil price increases.
- On the arrangement’s role: “A two-year arrangement under the Precautionary and Liquidity Line will provide Morocco with a useful insurance policy for meeting immediate financing needs if these risks materialize, strengthening market confidence and facilitating better access to private capital markets. The authorities intend to treat the arrangement as precautionary.”
Key statistics and timeline
- Arrangement length: 24 months.
- Total access: SDR 4,117.4 million (about US$6.21 billion, 700 percent of quota).
- First-year access: SDR 2,352.8 million (about US$ 3.55 billion, 400 percent of quota).
- Cumulative access by second year: US$ 6.21 billion.
- PLL introduced: 2011.
Press Release No. 12/287 — August 3, 2012, International Monetary Fund