In this rapport, the IMF expresses its satisfaction “for the very vigorous political response which has mitigated the social and economic impact of the recent negative shocks” undertaken by Morocco.
The Trustees of the Fund welcome monetary policy tightening in 2022 and support further hikes in key rates if necessary to contain inflationary pressures.
They also encourage the central bank to continue the transition to an inflation targeting framework once inflation has come down and the current uncertainty has dissipated.
With regard to fiscal policy, the IMF estimates that “the budget 2023 establishes a balance between the need to reduce the deficit, mitigate the social and economic impact of shocks and finance structural reforms”.
The Fund adds that the Kingdom must deploy new fiscal measures to accelerate the reduction of public debt and rebuild budgetary reserves.
In terms of improving the financial supervision and regulatory framework, the IMF welcomes Morocco’s progress as well as the completion by the authorities of the action plan designed with the FATF, “which should support progress towards exit from the FATF gray list“, it is specified.
In addition, IMF Executive Directors stressed that it remains essential to continue to monitor balance sheet exposures of financial institutionsincluding climate-related risks, even if the systemic risks for the financial system seem limited.
Several reforms currently carried out by the government are also mentioned, such as those of social protection, health and education. “They would make it possible to improve the equity and quality of access, to better target expenditure and to support human capital in the long term”, assesses the IMF.
And to add, “reforms of public enterprises and other initiatives aimed at stimulating private investment would stimulate the growth of the private sector”.
To support Morocco’s potential growth, the IMF stresses that “continued efforts to reduce dependence on fossil fuels, address water scarcity and reduce gender inequalities are all essential”.
In terms of figures, the IMF estimates, on the basis of the data communicated to it, that GDP growth in 2023 should accelerate to 3%, mainly thanks to the rebound in agricultural production and its positive effects. on the rest of the economy.
Inflation is expected to decline gradually to around 4% as the commodity price shock gradually dissipates and the monetary stance becomes less accommodative.
The current account deficit is expected to narrow towards its norm of around 3% of GDP over the medium term, boosted by structural reforms. He notes that the projections are subject to unusually high uncertainty, mostly related to worsening global conditions and greater fallout from Russia’s war in Ukraine.