IMF Executive Board Approves US$2.97 billion for Morocco Under the Precautionary and Liquidity Line
IMF News, December 17, 2018
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Bibliographic details
- Published: December 17, 2018
Arrangement details and headline figures
- Press Release No. 18/477; December 17, 2018.
- Two-year Precautionary and Liquidity Line (PLL) arrangement for Morocco:
- Total access: SDR 2.1508 billion (about US$ 2.97 billion, or 240 percent of Morocco’s quota).
- Access in the first year: SDR 1.25066 billion (about US$ 1.73 billion or 140 percent of quota).
- The authorities intend to treat the new arrangement as precautionary.
Objectives and rationale
- Provide insurance against external risks.
- Support the authorities’ policies to reduce fiscal and external vulnerabilities and promote higher and more inclusive growth.
- Continue to strengthen the economy’s resilience following prior PLL arrangements and recent reforms.
Key findings and country context (as stated by the IMF)
- Progress achieved:
- “Morocco has made significant strides in reducing domestic vulnerabilities in recent years.”
- Growth remained robust in 2018 and is expected to accelerate gradually over the medium term, subject to improved external conditions and steadfast reform implementation.
- External imbalances have declined substantially.
- Fiscal consolidation has progressed.
- Policy and institutional frameworks have been strengthened, including through:
- implementation of the recent Organic Budget Law,
- stronger financial sector oversight,
- a more flexible exchange rate regime,
- an improved business environment.
- Remaining risks and vulnerabilities:
- Outlook subject to external downside risks, including heightened geopolitical risks, slow growth in Morocco’s main trading partners, and global financial market volatility.
Policy recommendations and conditional support
- Further fiscal consolidation to help lower the public debt to GDP ratio over the medium term while securing priority investment and social spending.
- Specific areas for policy action:
- Tax and civil service reforms.
- Sound fiscal decentralization.
- Strengthened oversight of state owned enterprises.
- Better targeting of social spending.
- Structural and macro policies to enhance resilience and growth:
- Greater exchange rate flexibility to enhance shock absorption and preserve competitiveness.
- Adopting the central bank law.
- Continue implementing the 2015 Financial Sector Assessment Program recommendations to strengthen the financial sector policy framework.
- Reforms of education, governance, the labor market, and continued improvement in the business environment to raise potential growth and reduce high unemployment levels, especially among the youth, and to increase female labor participation.
PLL background and history
- The PLL was introduced in 2011 to meet more flexibly the liquidity needs of member countries with sound economic fundamentals and strong records of policy implementation but with some remaining vulnerabilities.
- Morocco’s prior PLL arrangements:
- First PLL arrangement: SDR 4.1 billion (about US$ 6.2 billion at the time of approval), approved on August 3, 2012.
- Second PLL arrangement: SDR 3.2 billion (about US$5 billion at the time of approval), approved on July 28, 2014.
- Third PLL arrangement: SDR 2.5 billion (about US$3.5 billion at the time of approval), approved on July 22, 2016.
Source: IMF Press Release No. 18/477 (December 17, 2018).