IMF Executive Board Concludes Second Review Under the Arrangement Under the Resilience and Sustainability Facility for Morocco
IMF News, November 12, 2024
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- Published: November 12, 2024
Review outcome and financing
- On November 11, 2024, the IMF Executive Board completed the second review under the Resilience and Sustainability Facility (RSF) arrangement for Morocco.
- The completion of the review allows the authorities to draw the equivalent of SDR 312.5 million (about US$415 million).
- Total disbursement under the program to date is SDR 562.5 million (about USD 747 million).
Macroeconomic context and near-term outlook
- Agricultural output suffered yet another drought in 2024; non-agricultural output has remained robust.
- Domestic demand is strengthening.
- The loss of jobs in the agricultural sector is keeping unemployment at a higher level than before the pandemic.
- Inflationary pressures have abated, and Bank Al-Maghrib (BAM) cut the policy rate in June 2024.
- The fiscal deficit is on track to meet the 2024 budget target, with increased current spending offset by stronger-than-expected revenues.
- Strong revenues from tourism, exports of goods, and remittances have kept the current account deficit at low levels.
Progress under the RSF and policy priorities
- Morocco is making progress in bolstering resilience against climate change and seizing opportunities from decarbonization under the RSF arrangement.
- Significant investments in water infrastructure aim at addressing water scarcity and will need to be complemented by demand management reforms.
- Continued progress toward liberalizing the electricity markets, a key dimension of the RSF, is needed to boost private sector participation in renewable energies.
- Benefits cited: help achieve Nationally Determined Contributions (NDC) targets; reduce reliance on imported fuels; improve firms’ competitiveness; help create jobs.
- Fiscal and tax measures:
- The focus on decarbonization while limiting the impact on the most vulnerable is welcomed.
- In the current socioeconomic context with still elevated food prices and high unemployment, it appears more socially acceptable to pursue increases in excises on coal and other highly polluting products than a higher value-added tax (VAT) on fossil fuels.
- The planned replacement measure will provide an important price signal consistent with the authorities’ decarbonization objectives.
- The estimated potential contribution of the new measure to the reduction of GHG emissions is comparable to that of the old measure, preserving the overall strength of the RSF arrangement.
- Remaining priorities and risks:
- Timely implementation of remaining measures under the RSF arrangement is crucial for supporting Morocco’s green transition.
- Efforts should focus on further liberalizing the electricity sector, greening the tax system, addressing risks that climate change poses to the stability of the fiscal and financial systems, and protecting the country’s diminishing groundwater resources.
- The recently published Climate Finance Development Strategy 2030 has an important role in mobilizing private climate finance.
Selected economic indicators and key statistics (2022–24)
- Population: 37.0 million; 2023
- Per capita GDP: $3,901; 2023
- Quota: SDR 894.4 million
- Poverty rate: 4.8 percent; 2013
- Main exports: automobiles, phosphate and derivatives; 2023
- Key export markets: France and Spain (42.8% of total trade); 2023
- Output (annual percent change)
- Real GDP growth: 2022: 1.5; 2023: 3.4; 2024 Proj.: 2.6
- Real nonagricultural GDP growth: 2022: 3.2; 2023: 3.6; 2024 Proj.: (not separately listed beyond the table structure)
- Employment (percent)
- Unemployment: 2022: 11.8; 2023: 13.0; 2024 Proj.: 13.2
- Prices
- Inflation (end of period): 2022: 8.3; 2023: 2.1; 2024 Proj.: (not separately listed beyond the table structure)
- Inflation (period average): 2022: 6.6; 2023: 6.1
- Central government finances (percent of GDP) 1/
- Revenue: 2022: 28.7; 2023: 28.4; 2024 Proj.: (not separately listed beyond the table structure)
- Expenditure: 2022: 34.1; 2023: 32.8; 2024 Proj.: 33.0
- Fiscal balance: 2022: -5.4; 2023: -4.4; 2024 Proj.: -4.3
- Public debt: 2022: 71.5; 2023: 69.5; 2024 Proj.: 69.1
- Money and credit (annual percent change)
- Broad money: 2022: 8.0; 2023: 3.9; 2024 Proj.: 5.0
- Claims to the economy 2/: 2022: 7.1; 2023: 5.2; 2024 Proj.: 4.5
- Balance of payments
- Current account including official transfers (percent of GDP): 2022: -3.6; 2023: -0.6; 2024 Proj.: -1.5
- Exports of goods (in U.S. dollars, annual percent change): 2022: 15.1; 2023: -0.5; 2024 Proj.: 6.9
- Imports of goods (in U.S. dollars, annual percent change): 2022: 21.9; 2023: -2.5; 2024 Proj.: (not separately listed beyond the table structure)
- Merchandise trade balance (percent of GDP): 2022: -20.2; 2023: -17.4; 2024 Proj.: -17.1
- FDI (percent of GDP): 2022: 1.2; 2023: 0.2; 2024 Proj.: 0.9
- Gross reserves (months of imports): 2022: 5.3; 2023: 5.5; 2024 Proj.: (not separately listed beyond the table structure)
- External Debt (percent of GDP): 2022: 50.9; 2023: 47.1; 2024 Proj.: 44.6
- Exchange rate — REER (annual average, percent change): 2022: -3.8; 2023: 1.4; 2024 Proj.: ...
- Memorandum Items:
- Nominal GDP (in billions of U.S. dollars): 2022: 131.0; 2023: 144.4; 2024 Proj.: 156.8
- Net imports of energy products (in billions of U.S. dollars): 2022: -15.1; 2023: -12.0; 2024 Proj.: -11.7
- Local currency per U.S. dollar (period average): 2022: 10.2; 2023: 10.1; 2024 Proj.: (not separately listed beyond the table structure)
- Notes:
- Sources: Moroccan authorities; and Fund staff estimates.
- 1/ Include grants.
- 2/ Includes credit to public enterprises.
- [1] Approved by the IMF Executive Board on September 28, 2023 for an amount of SDR 1 billion (about US$1.3 billion) (see press release No. 23/327)
IMF Press Release No. 24/415, November 12, 2024