On August 1, 2017, the Executive Board of the International Monetary Fund
(IMF) completed the second review under the Precautionary and Liquidity
Line (PLL) Arrangement and reaffirmed Morocco’s continued qualification for
the PLL.
The two-year PLL arrangement for Morocco in the amount of SDR 2.504 billion
(about US$3.42 billion) was approved by the IMF’s Executive Board in July
2016 (see Press Release
No. 16/355) and the first review of the arrangement was completed on May 15, 2017
(see Press Release No.
17/169). The Moroccan authorities have not drawn on the arrangement and continue
to treat it as precautionary. The arrangement will expire on July 21, 2018.
Following the Executive Board’s discussion, Mr. David Lipton, First Deputy
Managing Director and Acting Chair, said:
“Morocco’s sound economic fundamentals and overall strong track record of
policy implementation have contributed to a solid macroeconomic performance
in recent years. External imbalances are projected to narrow in 2017 and
international reserves to remain at a comfortable level. Fiscal
developments are positive, with the budget deficit projected to narrow
further in 2017 due to strong revenue performance and contained spending.
Growth is expected to rebound in 2017 and accelerate gradually over the
medium term, subject to improved external conditions and steadfast reform
implementation. But this outlook remains subject to domestic and external
downside risks. In this context, Morocco’s Precautionary and Liquidity Line
(PLL) arrangement with the Fund continues to serve as useful insurance
against external risks and supports the authorities’ economic policies.
“The authorities are committed to sustaining sound policies. The new
government’s economic program is in line with key reforms agreed under the
PLL arrangement, such as reducing fiscal and external vulnerabilities while
strengthening the foundations for higher and more inclusive growth.
“Building on progress made in recent years, further fiscal consolidation is
needed and should be based on accelerated tax reforms, sound public
financial management at the local level as part of fiscal decentralization,
comprehensive civil service reform, enhanced financial oversight of state
owned enterprises, and increased efficiency of social programs and public
investment projects.
“Adopting the central bank law and continuing to implement the 2015
Financial Sector Assessment Program recommendations will help strengthen
the financial sector policy framework. Moving toward a more flexible
exchange rate regime, underpinned by a well communicated strategy, will
help preserve external competitiveness and enhance the economy’s capacity
to absorb shocks.
“Finally, raising potential growth and making growth more inclusive, by
reducing persistently high unemployment levels, especially among the youth,
and increasing female labor participation, will require further measures to
improve the business climate, governance, competitiveness, access to
finance, the labor market, and regional disparities.”
