Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved today
a new successor two-year arrangement for Morocco under the Flexible Credit
Line (FCL) in an amount equivalent to SDR 3.45 billion (about US$ 4.5
billion, equivalent to 386 percent of quota), and noted the cancelation by
Morocco of the previous FCL arrangement. The Moroccan authorities stated
their intention to treat the new arrangement as precautionary.
This is Morocco’s second FCL, with lower access in line with the
authorities’ goal of continuing to reduce access as risks permit in the
context of their gradual exit strategy. The first FCL was approved on April
3, 2023 in an amount of SDR 3.7262 billion (equivalent to 417 percent of
quota) (see
Press Release No. 23/104
). Before the first FCL, Morocco had also benefited from four successive
Precautionary and Liquidity Line (PLL) arrangements between 2012-2020 (see
Press Release No. 12/287
,
Press Release No. 14/368
,
Press Release No. 16/355
,
Press Release No. 18/477
).
Following the Executive Board’s discussion on Morocco, Mr. Kenji Okamura,
Deputy Managing Director, and Acting Chair, said:
“The Moroccan economy has shown sustained track record of implementing very
strong policies and remarkable resilience to recent shocks, although a
succession of droughts has severely curtailed agricultural production and
pushed unemployment to historical highs.
“Morocco's very strong institutional and policy frameworks have been
effective in addressing these shocks, with well-calibrated fiscal,
monetary, and financial policies. The recent bond issuance in the
international capital markets at very favorable terms is a testament of the
authorities’ very strong track record. Looking ahead, the authorities are
committed to continuing to implement their ambitious structural reform
agenda towards a more resilient, inclusive, greener, and private sector-led
growth, and further strengthening their institutional policy frameworks.
The new FCL arrangement will continue to be instrumental in supporting
Morocco’s commitment to such strong policies and reforms.
“The new FCL arrangement will also continue to provide Morocco insurance
against downside risks. The Moroccan economy remains vulnerable to a
worsening of global economic and financial conditions, higher commodity
prices, and new occurrence of droughts.
“The authorities are committed to treating the new FCL arrangement as
precautionary and gradually reducing access, in the context of their exit
strategy, contingent on the evolution of risks.”
ANNEX
Recent Economic Developments
Morocco’s economy has demonstrated resilience in the face of multiple
shocks. In recent years, Morocco navigated the global pandemic, the
economic fallout from Russia’s invasion of Ukraine, a devastating
earthquake in 2023, and five droughts in six years. While these shocks have
weighed on economic activity and the successive droughts have curtailed
agricultural production and pushed unemployment to historical highs, the
authorities managed to preserve macroeconomic stability through effective
fiscal, monetary, and financial policy responses. They also continued to
implement important structural reforms to achieve Morocco’s new model of
development, aimed at stronger, greener, more resilient and inclusive
growth. Medium-term growth is projected at 3.6 percent, supported by
planned infrastructure projects and progress in structural reforms.
However, Morocco remains highly exposed to elevated uncertainty and
external risks, and policy space remains limited relative to what would be
needed to mitigate the economic impact if external risks were to
materialize. At the same time, the risk of severe droughts continues to
imperil the agricultural sector—with large weight in Morocco’s economy—as
the authorities work on addressing the country’s water scarcity.
Arrangement Summary
The IMF approved today a successor two-year arrangement for Morocco under
the Flexible Credit Line (FCL), designed for crisis prevention and
mitigation, of about US$ 4.5 billion. Morocco qualifies for the FCL by
virtue of its very strong institutional policy frameworks and economic
fundamentals, its track record of implementing very strong policies, and
its continued commitment to maintaining such policies in the future. The
authorities consider that the FCL arrangement has served the country well
and remains the most appropriate tool to help them continue to rebuild
buffers while accelerating the implementation of structural reforms in a
highly uncertain external environment.
