Morocco: Second Review Under The Arrangement Under the Resilience and Sustainability Facility-Press Release; Staff Report; and Statement by the Executive Director for Morocco
IMF Staff Country Reports, November 25, 2024
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- Morocco: Second Review Under The Arrangement Under the Resilience and Sustainability Facility-Press Release; Staff Report; and Statement by the Executive Director for Morocco
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- Published: November 25, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400292941.002
Summary and Key Findings
- Presents Morocco’s Second Review under the Arrangement under the Resilience and Sustainability Facility (RSF).
- Authorities show strong commitment to Morocco’s transition to a greener economy.
- Agricultural output suffered yet another drought in 2024, while nonagricultural output has remained robust and domestic demand is strengthening.
- Morocco continues to make progress in bolstering its resilience against climate change and seizing opportunities from decarbonization.
- 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.
- Timely implementation of remaining measures under the RSF arrangement will be crucial for supporting Morocco’s green transition.
Economic and Sectoral Context
- 2024: Another drought year that reduced agricultural output.
- Nonagricultural output: Remained robust in 2024.
- Domestic demand: Strengthening in 2024.
- Socioeconomic conditions: Still elevated food prices and high unemployment, influencing the political economy of reform choices.
Climate, Energy, and Decarbonization Measures
- Continued progress in bolstering resilience against climate change.
- Emphasis on seizing opportunities from decarbonization while protecting vulnerable groups.
- Policy preference noted for increasing excises on coal and other highly polluting products rather than raising VAT on fossil fuels.
- Planned replacement measure: Expected to send an important price signal aligned with decarbonization objectives.
- Areas highlighted for further action:
- Further liberalizing the electricity sector.
- Greening the tax system.
- Addressing risks that climate change poses to fiscal and financial stability.
- Protecting diminishing groundwater resources.
Policy Recommendations and Implementation Priorities
- Timely implementation of remaining measures under the RSF arrangement to support the green transition.
- Focus reforms on:
- Electricity sector liberalization.
- Tax system greening, including use of excises to target polluting products.
- Strengthening fiscal and financial system resilience to climate risks.
- Water resource protection, particularly groundwater.
Content in this bundle
- 1marea2024002-print-pdf