IMF Executive Board Concludes 2017 Article IV Consultation with Morocco
IMF News, December 14, 2017
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- Published: December 14, 2017
Macroeconomic performance and outlook
- Real GDP growth:
- 2016: 1.2
- 2017 (expected): 4.4 percent
- Medium-term: growth expected to reach 4.5 percent by 2021
- Growth drivers:
- 2017 pickup mostly driven by a significant rebound in agricultural activity; non-agricultural activity remains subdued
- Exports growth (2017): 6.5 percent, driven by food product and phosphate and derivatives exports
- Inflation:
- Headline inflation (year-on-year) expected to decline to 0.6 percent in 2017, reflecting lower food prices
- Consumer prices (end of period): 2016: 1.8; 2017: 0.9
- Consumer prices (period average): 2013: 1.9; 2014: 1.5; 2015: 1.3
- Unemployment:
- Unemployment rate increased to 10.6 percent in Q3 2017 (year-on-year)
- Youth unemployment: 29.3 percent
External sector and reserves
- Current account:
- Current account deficit projected to improve in 2017 to 3.9 percent of GDP
- Current account excluding official transfers (selected years): 2013: -8.3; 2014: -7.6; 2015: -2.6; 2016: -5.3; 2017: -4.3
- Current account including official transfers (selected years): 2013: -5.9; 2014: -2.1; 2015: -4.4; 2016: -3.9; 2017: -3.7
- Trade and reserves:
- Exports of goods and services (U.S. dollars, percentage change): 2013: 7.4; 2014: -7.0; 2015: 6.5; 2016: 7.2
- Imports of goods and services (U.S. dollars, percentage change): 2013: 1.0; 2014: -16.5; 2015: 9.6; 2016: 5.3
- Merchandise trade balance (percent of GDP): 2013: -20.5; 2014: -18.7; 2015: -14.5; 2016: -17.1; 2017: -16.4; 2018: -16.0
- Gross reserves (in billions of U.S. dollars): 2013: 19.0; 2014: 20.5; 2015: 23.0; 2016: 25.4; 2017: 24.8; 2018: 27.6
- Reserves in months of next year imports of goods and services (selected years): 2013: 4.6; 2014: 6.1; 2015: 6.4; 2016: 5.9; 2017: (about) six months of imports noted in text
- In percent of Fund reserve adequacy metric (selected years): 2013: 74.3; 2014: 79.9; 2015: 94.7; 2016: 99.3; 2017: 90.3; 2018: 93.8
- Net imports of energy products (in billions of U.S. dollars): 2013: -12.2; 2014: -11.0; 2015: -6.8; 2016: -5.5; 2017: -7.3
Fiscal developments
- Fiscal consolidation:
- Resumption of fiscal consolidation noted; developments as of end-October 2017 were broadly positive
- Tax revenues performed better than projected; grant revenues were lower than anticipated
- Public spending on wages and interest payments was below expectations; capital expenditures decelerated by 2 percent year-on-year
- Fiscal aggregates (selected years, percent of GDP):
- Revenue (2015–2017 series shown): 27.8; 26.5; 26.1
- Expenditure (2015–2017 series shown): 32.9; 30.7; 30.2
- Budget balance: 2013: -5.1; 2014: -4.8; 2015: -4.2; 2016: -4.1; 2017: -3.5; 2018: -3.0
- Primary balance (excluding grants): 2013: -3.2; 2014: -3.6; 2015: -1.9; 2016: -2.4; 2017: -1.3
- Cyclically-adjusted primary balance (excl. grants): 2013: -2.9; 2014: -1.6; 2015: -1.8; 2016: -1.2
- Total government debt: 2013: 61.7; 2014: 63.3; 2015: 63.7; 2016: 64.7; 2017: 64.3; 2018: 64.0
Financial sector
- Banking sector:
- Banks are well capitalized; risks to financial stability are limited
- Nonperforming loans remain relatively high but are closely monitored and well provisioned
- Regulatory limits to reduce credit concentration are being strengthened
- Collaboration with cross-border supervisory bodies to contain risks related to Moroccan banks’ expansion in Africa is being strengthened
- Monetary indicators (selected annual percentage change):
- Credit to the economy: 2013: 3.8; 2014: 2.5; 2015: 2.0; 2016: 4.3; 2017: 5.7
- Base money: 2013: 9.0; 2014: 6.2; 2015: 5.0; 2016: 6.0
- Velocity of broad money (2013): 0.8
Risks and structural reform priorities
- Main risks highlighted:
- Growth risks in advanced and emerging countries
- Geopolitical tensions in the region
- World energy prices
- Global financial market volatility
- Structural reforms needed to sustain stronger medium-term growth and inclusiveness:
- Labor market efficiency reforms
- Improved access to finance
- Quality of education improvements
- Enhanced public spending efficiency
- Further improvements to the business environment
- Strengthening the social safety nets system to achieve more inclusive growth
- Directors’ recommendations and assessments:
- Maintain sound fiscal and monetary policies and step up structural reform efforts, supported by measures to strengthen the social safety net
- Continue fiscal consolidation and control spending on wages and goods and services to create fiscal space for priority spending in the medium term
- Implement comprehensive tax reforms to broaden the tax base and promote greater equity and simplicity
- Carefully implement fiscal decentralization and comprehensive civil service reform
- Strengthen state‑owned enterprise (SOE) oversight and improve targeting of social spending to protect vulnerable segments
- Move to a more flexible exchange rate regime and a new monetary policy framework to help absorb external shocks and remain competitive
- Bank Al Maghrib to increase supervisory capacity in line with 2015 Financial Sector Assessment Program recommendations, including more risk‑based and forward looking supervision and tighter provisioning requirements
- Sustain implementation of broad‑based structural reforms, including better governance, improved education and vocational training, to reduce unemployment (especially youth) and increase women's participation in the labor force
- Progress in implementing the national strategy against corruption and in making the Competition Council operational was encouraged
Selected economic indicators (2013–18) — key series (annual percentage change or percent of GDP as presented)
- Output and Prices:
- Real GDP: 2013: 4.5; 2014: 2.7; 2015: 1.2; 2016: 4.4; 2017: 3.1; 2018: …
- Real agriculture GDP: 2013: 17.2; 2014: -2.2; 2015: 11.9; 2016: -12.8; 2017: 15.2; 2018: -1.0
- Real non-agriculture GDP: 2013: 2.9; 2014: 3.4; 2015: 3.7; 2016: 3.0; 2017: 3.6
- Investment and Saving (percent of GDP):
- Gross capital formation: 2013: 34.7; 2014: 32.5; 2015: 30.8; 2016: 32.6; 2017: 33.4; 2018: 34.5
- Nongovernment (of gross capital formation): 2013: 29.6; 2014: 27.2; 2015: 25.3; 2016: 26.9; 2017: 28.0; 2018: 29.0
- Gross national savings: 2013: 27.1; 2014: 26.6; 2015: 28.7; 2016: 28.2; 2017: 29.5; 2018: 25.6
- External Sector:
- Foreign direct investment (percent of GDP): 2013: 2.8; 2014: 2.6; 2015: 2.4
- Total external debt (percent of GDP): 2013: 29.3; 2014: 33.3; 2015: 33.9; 2016: 34.6; 2017: 33.5
- Memorandum items:
- Nominal GDP (in billions of U.S. dollars): 2013: 106.8; 2014: 110.1; 2015: 101.2; 2016: 103.6; 2017: 110.0; 2018: 117.6
- Unemployment rate (in percent): 2013: 9.2; 2014: 9.9; 2015: 9.7; 2016: 9.4
- Population (millions): 2013: 33.8; 2014: 34.1; 2016: 35.2
- Population growth (in percent): 2013: 1.21; 2014: 1.17; 2015: 1.05; 2016: 1.06
- Local currency per U.S. dollar (period average): 2013: 8.4; 2014: 9.8
- Real effective exchange rate (annual average, percentage change): 2013: 0.0; 2014: 0.3; 2015: 2.3
Source: IMF Executive Board Concludes 2017 Article IV Consultation with Morocco (Press Release No. 17/497), December 14, 2017.
