Morocco: Request for an Arrangement Under the Precautionary and Liquidity Line and Cancellation of the Current Arrangement
IMF Staff Country Reports, August 5, 2014
Source details
- Canonical URL
- Morocco: Request for an Arrangement Under the Precautionary and Liquidity Line and Cancellation of the Current Arrangement
Other formats
Bibliographic details
- Published: August 5, 2014
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498348140.002
Executive summary and program status
- Morocco faced a series of exogenous shocks in recent years; the authorities responded with a policy program supported by the Fund’s Precautionary and Liquidity Line (PLL).
- The program remained broadly on track and the authorities did not draw on the PLL.
- The authorities are requesting a two-year successor PLL arrangement with a lower access of 550 percent of quota than the first arrangement.
- The current PLL provided insurance against external risks, anchored the authorities’ reform agenda, and sent positive signals to markets.
- The authorities intend to treat the successor arrangement as precautionary.
Near-term outlook and risks
- Growth will slow in 2014, but is expected to accelerate over the medium term owing to structural reforms and improved global conditions.
- Major external downside risks highlighted:
- A protracted period of slower growth in Europe.
- A surge in global financial market volatility linked to the exit from unconventional monetary policies in large advanced economies.
- Higher oil prices resulting from geopolitical tensions.
- These external risks could significantly degrade the balance of payments.
Rationale for the successor PLL and access reduction
- The successor PLL would continue to support the authorities’ policies given significant global risks.
- The lower access (550 percent of quota) reflects:
- Strengthening of the economy in the past two years.
- A balance of risks lower than two years ago.
IMF staff assessment and Fund implications
- Staff considers that Morocco continues to qualify for a PLL arrangement and recommends approval of the authorities’ request.
- The proposed arrangement carries low risks to the Fund.
- Were the authorities to draw on the full amount available, the arrangement would have minimal impact on the Fund’s liquidity.
- The authorities’ policy package provides reasonable prospects of exit at the end of this arrangement if external circumstances warrant.
Subjects and keywords (as presented)
- Subjects: Balance of payments, Current account deficits, External debt, Government debt management, Oil prices, Prices, Public debt, Public financial management (PFM)
- Keywords: authorities' effort, cost recovery, CR, Current account deficits, Europe, Global, government, Government debt management, IMF Deputy managing director, ISCR, member of the IMF, Middle East, Morocco, Oil prices, short-term debt, Sub-Saharan Africa, subsidy reform, successor PLL arrangement
IMF Staff Country Report No. 2014/241