IMF Staff Completes 2024 Article IV Consultation with Morocco

IMF News, February 21, 2024

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Bibliographic details

• Published: February 21, 2024

Mission and timing

• IMF staff team led by Roberto Cardarelli conducted discussions with the Moroccan authorities in Rabat from January 31 to February 15.
• Press Release No. 24/53; publication date: February 21, 2024.
• Team met with senior officials of the government of Morocco, Bank Al-Maghrib, and representatives of the public and private sectors.

Macroeconomic performance and outlook

• Output growth:
  • "Economic growth has strengthened in 2023" driven by the recovery in domestic demand and buoyant exports.
  • Growth is "expected to increase gradually to around 3.5 percent over the medium term, boosted by stronger investment."
• External sector:
  • "Stronger domestic demand should gradually widen the current account deficit towards 3 percent of GDP."
• Inflation:
  • Inflation "is projected to continue to fall slowly as pressures on commodity and food prices fade."

Monetary policy assessment

• IMF staff view:
  • "The current monetary policy stance is appropriate."
  • "Future changes to the monetary policy stance should remain data dependent."
  • Recommendation: "As inflation continues to fall, Bank Al-Maghrib should resume its transition to an inflation-targeting framework."

Fiscal policy assessment and recommendations

• Fiscal stance:
  • Staff "welcomes the authorities' commitment to fiscal consolidation over the medium term."
  • "The gradual reduction of the fiscal deficit over the next three years appears appropriate."
• Measures and needed actions:
  • Raise tax revenues and further rationalize spending to rebuild fiscal buffers and finance structural reforms.
  • Complete the reform of the tax system, including of the VAT.
  • Improve tax administration.
  • Rationalize spending, including transfers to state-owned enterprises (SOEs).
  • Expand use of the Unified Social Registry to all social programs.
  • Assess, monitor, and report potential budgetary implications of future public private partnership programs related to infrastructure.
  • Add more information on revenues expected from mobilization of real government assets and quantify the impact of all new policy measures on the fiscal deficit over the next few years.

Structural reforms and inclusive growth

• Key objectives:
  • Boost job creation and make growth more inclusive.
  • Accelerate reforms to the SOE sector.
  • Operationalize the Mohammed VI Fund and the new Charter of Investment to stimulate private investment.
  • Strengthen the fight against corruption and address anti-competitive practices.
  • Reform the unemployment insurance scheme and improve active labor market policies to boost short-run job creation.
  • Improve female labor force participation, which is "at historical lows."
  • Advance ambitious reforms of the health care sector and education system to improve access and quality and enhance long-term capital accumulation.
  • Further liberalize the electricity market to encourage the transition to renewable energy.
  • Address water scarcity via the authorities’ infrastructure plan, remodulation of water tariffs, and improved efficiency in water resource utilization.
  • Generalize social protection under the Unified Social Registry to better target social support.
  • VAT reform "is expected to improve neutrality and incentivize formality, expanding the tax base."

Team statement and next steps

• End-of-mission note:
  • End-of-Mission press releases convey preliminary findings after a visit; the views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.
  • Based on preliminary findings, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
• Acknowledgement:
  • The IMF team thanked the Moroccan authorities and other stakeholders for their hospitality and candid and productive discussions.

Source: Press Release No. 24/53, February 21, 2024, IMF Communications Department.

References

• Morocco and the IMF
• IMF Policy Advice -- A Factsheet
• Press Releases
• PRESS CENTER
• https://www.imf.org/en/home