IMF Executive Board Concludes 2021 Article IV Consultation with Morocco
IMF News, February 9, 2022
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- Published: February 9, 2022
Overview
- Press Release No. 22/27 — February 9, 2022.
- On February 2, 2022, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Morocco on a lapse of time basis.
- Economic activity recovered most of the ground lost in the 2020 recession owing to continued fiscal and monetary stimulus, rebound of exports, buoyant remittances, and the exceptional harvest following two years of drought.
- After shrinking by 6.3 percent in 2020, GDP is forecast to have grown by 6.3 percent in 2021.
- Unemployment: 11.8 percent in 2021, above pre-pandemic level, driven by rebound in participation rate.
- Moroccan banks weathered the crisis well, supported by Bank al-Maghrib.
Executive Board Assessment
- Morocco’s rebound drivers: exceptional harvest, rebound of exports, accommodative monetary and fiscal policy stances, continued strength in remittances.
- Current account: after strong compression in 2020, returning to levels closer to pre-pandemic; international reserve position much stronger.
- Staff expects GDP to grow at around 3 percent over the next few years with gradual acceleration thereafter under structural reforms.
- Outlook subject to high uncertainty related to the pandemic and the pace and effectiveness of reforms.
- Faster-than-expected closure of the output gap and higher government debt ratio would require a tighter fiscal policy stance than currently envisaged.
- Staff projects central government debt-to-GDP ratio to stabilize at close to 80 percent if fiscal deficits fall very slowly over the medium term.
- Recommendation for faster fiscal consolidation to bring the debt-to-GDP ratio closer to pre-pandemic levels to reduce vulnerability and free resources for private sector investment.
- Fiscal policy should be anchored by a credible medium-term macro-fiscal framework, comprehensive tax reform, systematic review of government spending, and civil service reform to contain wage bill increases.
- Monetary policy: lower fiscal deficits would allow monetary policy to remain accommodative for longer, assuming inflationary pressures remain manageable.
- Recent inflation rise is limited and expected to subside as imported cost pressures from supply-side bottlenecks and higher commodity prices ease.
- Bank al-Maghrib (BAM) has room for gradual normalization of monetary policy but should be ready to tighten if inflation accelerates.
- The recent appreciation of the dirham to the lower end of the exchange rate band offers an opportunity to accelerate the planned transition to an inflation-targeting framework.
- Staff welcomes authorities’ commitment to a new wave of structural reforms, including generalization of social protection, full implementation of the Unified Social Registry, SOE reform, and recommendations in the New Model of Development (NMD).
- Emphasis on careful design, sequencing, and financing of reforms given potentially large financing needs, uncertain impact on potential output, and narrow fiscal space.
Macroeconomic Outlook & Projections (selected)
- GDP growth: -6.3 (2020); 6.3 (2021); 3.0 (2022); 3.3 (2023) [Output (annual percent change), Real GDP growth].
- Real nonagricultural GDP growth: 2.9 (2017); 3.7 (2018); -6.0 (2020); 4.7 (2021); 3.9 (2022).
- Unemployment (percent): 10.6 (2017); 9.4 (2018); 10.2 (2019); 12.2 (2020); 11.8 (2021); 11.3 (2022); 10.9 (2023); 10.4 (2024); 9.9 (2025); 9.3 (2026).
- Inflation (end of period): 1.7 (2017); 0.1 (2018); 1.0 (2019); -0.9 (2020); 1.9 (2021); 1.6 (2022); 1.8 (2023); 2.0 (2024).
- Central government finances (percent of GDP) 1/:
- Revenue: 26.0 (2017); 26.1 (2018); 25.6 (2019); 28.6 (2020); 25.3 (2021); 26.2 (2022); 26.4 (2023); 26.8 (2024); 26.9 (2025).
- Expenditure: 30.1 (2017); 29.8 (2018); 29.4 (2019); 36.1 (2020); 32.2 (2021); 32.3 (2022); 32.1 (2023); 31.3 (2024); 30.9 (2025); 30.5 (2026).
- Fiscal balance: -3.5 (2017); -3.7 (2018); -3.8 (2019); -7.6 (2020); -6.8 (2021); -5.9 (2022); -4.9 (2023); -4.1 (2024); -3.6 (2025).
- Public debt: 65.1 (2017); 65.2 (2018); 76.4 (2019); 76.9 (2020); 77.5 (2021); 79.2 (2022); 79.5 (2023); 79.0 (2024); 78.3 (2025); (2026 value not listed in table).
- Money and credit (annual percent change): Broad money 5.5 (2017); 4.1 (2018); 3.8 (2019); 8.4 (2020); claims to the economy 2/ 3.4 (2017); 5.6 (2018); 4.6 (2019).
- Current account including official transfers (percent of GDP): -3.4 (2017); -5.3 (2018); -1.5 (2019); -3.0 (2020); -3.2 (2021); -3.1 (2022); -3.3 (2023).
- Exports of goods (U.S. dollars, annual percent change): 12.7 (2017); 11.6 (2018); -15.2 (2019); 22.5 (2020); 5.8 (2021); 5.9 (2022); 5.7 (2023).
- Imports of goods (U.S. dollars, annual percent change): -2.3 (2017); -14.8 (2018); 29.0 (2019); 10.5 (2020); 5.0 (2021); 6.2 (2022).
- Merchandise trade balance (percent of GDP): -16.5 (2017); -17.2 (2018); -13.5 (2019); -15.4 (2020); -16.6 (2021); -16.8 (2022); -16.9 (2023).
- FDI (percent of GDP): 1.5 (2017); 2.4 (2018); 1.1 (2019); 1.4 (2020).
- Gross reserves (months of imports): 5.4 (2017); 6.9 (2018); 7.1 (2019); 6.5 (2020); 6.6 (2021); 6.1 (2022).
- External Debt (percent of GDP): 34.8 (2017); 31.8 (2018); 33.1 (2019); 43.7 (2020); 40.5 (2021); 41.6 (2022); 41.2 (2023); 40.7 (2024); 40.2 (2025); 39.8 (2026).
- REER (annual average, percent change): -0.4 (2017).
- Memorandum items:
- Population: 36.911 million; 2020.
- Per capita GDP: $3,009; 2020.
- Quota: SDR 894.4 million.
- Poverty rate: 4.8 percent; 2014.
- Main exports: automobiles, phosphate and derivatives; 2020.
- Key Export Markets: France and Spain (44 percent of total exports); 2020.
- Nominal GDP (in billions of U.S. dollars): 109.7 (2017); 118.1 (2018); 119.9 (2019); 114.6 (2020); 126.1 (2021); 131.2 (2022); 138.1 (2023); 145.4 (2024); 153.5 (2025).
- Net imports of energy products (in billions of U.S. dollars): -7.2 (2017); -8.8 (2018); -7.9 (2019); -5.2 (2020); -7.7 (2021); -9.4 (2022); -9.2 (2023); -9.6 (2024); -9.8 (2025); -9.9 (2026).
- Local currency per U.S. dollar (period average): 9.7 (2017); 9.6 (2018); 9.5 (2019).
Policy Recommendations and Implementation Priorities
- Accelerate fiscal consolidation to reduce debt-to-GDP ratio toward pre-pandemic levels.
- Anchor fiscal policy in a credible medium-term macro-fiscal framework.
- Implement comprehensive tax reform and systematic review of government spending.
- Undertake civil service reform to contain wage bill increases.
- Allow monetary policy room by reducing fiscal deficits; BAM to normalize gradually but be ready to tighten if inflation accelerates.
- Use exchange rate movement (dirham appreciation to lower end of band) to support transition to an inflation-targeting framework.
- Implement structural reforms: generalize social protection, complete Unified Social Registry, reform SOEs, and pursue NMD recommendations to strengthen competitiveness, governance, human capital, and inclusiveness.
- Design and sequence reforms carefully with an adequate financing plan within a coherent and stable macroeconomic framework.
IMF Communications Department — Press Release No. 22/27 (February 9, 2022).