IMF Executive Board Completes the Third and Final Review under the Precautionary and Liquidity Line Arrangement for Morocco
IMF News, January 19, 2018
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- Published: January 19, 2018
Executive Board action and arrangement status
- The Executive Board completed the third and final review under the Precautionary and Liquidity Line (PLL) Arrangement for Morocco on January 19, 2018.
- The two-year PLL arrangement for Morocco is in the amount equivalent to SDR 2.504 billion (about US$3.61 billion).
- The arrangement was approved by the IMF’s Executive Board in July 2016.
- The Moroccan authorities have not drawn on the arrangement and continued to treat it as precautionary.
- The arrangement will expire on July 21, 2018.
Macroeconomic assessment and recent developments (as summarized by Mr. Mitsuhiro Furusawa)
- “Morocco’s sound macroeconomic policies and reform implementation have helped improve the resilience of the economy.”
- External sector:
- “External imbalances narrowed in 2017 and international reserves remain at a comfortable level.”
- “The recent introduction of greater exchange rate flexibility will help further improve Morocco’s external position, enhance the economy’s capacity to absorb shocks, and preserve its external competitiveness.”
- Fiscal sector:
- “Fiscal developments were also positive, with the budget deficit declining due to strong revenue performance and contained spending.”
- “Building on progress made in recent years, continued fiscal consolidation will help lower the public debt-to-GDP ratio while securing priority investment and social spending in the medium term.”
- Growth and outlook:
- “Growth rebounded in 2017 and is expected to accelerate gradually over the medium term, contingent on improved external conditions and steadfast reform implementation.”
- “However, the outlook remains subject to downside risks.”
- Financial sector:
- “Adopting the central bank law and continuing efforts to increase supervisory capacity in line with 2015 Financial Sector Assessment Program recommendations will help strengthen the financial sector policy framework.”
Policy recommendations and reform priorities
- Fiscal policy and public finance:
- Continue fiscal consolidation to lower the public debt-to-GDP ratio while securing priority investment and social spending.
- Pursue a comprehensive approach to tax reforms.
- Strengthen public financial management at the local level as part of fiscal decentralization.
- Public sector and governance:
- Implement comprehensive civil service reform.
- Strengthen state-owned enterprise (SOE) oversight.
- Social spending and inclusion:
- Improve targeting of social spending.
- Raise potential growth and make it more inclusive by reducing persistently high unemployment levels, especially among the youth, increasing female labor participation, and reducing regional disparities.
- Structural reforms to boost private sector-led growth:
- Advance education, governance, and labor market reforms.
- Improve the business environment to support more private sector-led growth.
- Financial sector reforms:
- Adopt the central bank law.
- Increase supervisory capacity in line with 2015 Financial Sector Assessment Program recommendations.
Press Release No. 18/07 — January 19, 2018, IMF Communications Department
