Difficult external environment and unfavorable climatic conditions
Liquidity injections (from BAM) involved an amount of 77.5 billion dirhams. 35.3 billion dirhams were injected through 7-day advances against 21.5 billion dirhams in the form of repurchase agreements and 20.6 billion dirhams via guaranteed loans.
Economic activity appears to have slowed markedly in the first quarter of the year. An observation made by Bank Al-Maghrib in its latest economic review. The central bank explains this slowdown by several factors, in particular the difficult external environment in connection with the conflict in Ukraine as well as the unfavorable climatic conditions marking the current agricultural campaign. Indeed, a significant rainfall deficit is hampering the current agricultural campaign. At the end of March 2022, it reached 35.8% compared to the previous campaign and 34.1% compared to the average of the last five years. “The filling rate of the dams also remains low, being limited to 8 April at 34.1% against 50.9% on the same date a year earlier”, underlines Bank Al-Maghrib in its publication.
At the sectoral level, the construction industry saw its added value slow down in the first quarter of 2022. Cement sales posted an increase limited to 1% over the said period against a contraction of 10.1% the previous year.
The “electricity and water” branch continued to grow in the first quarter of the year. Electricity production thus increased by 4.5% in January and February against a decline of 2.2%. By analyzing production by source, Bank Al-Maghrib notes an increase of 7.9% for thermal and 6.4% for wind. Hydropower production also contracted by 20.2% due to the rainfall deficit. The central bank also observes a decline of 41.2% for solar. With regard to demand, it marks an improvement of 2.8% for the first quarter of the year. Similarly, the balance of external electricity exchanges remained in surplus. It stands at 13 GWh.
For the extractive industries, the decline observed at the end of 2021 continued in the first quarter of 2022. It reflects a 10.1% decline in the market production of phosphates at the end of February. “The activity should benefit from the fall in the world supply following in particular the decision of the Russian authorities to suspend the country’s exports of this raw material”, can we read from the publication of Bank Al-Maghrib. With regard to the hotel sector, Bank Al-Maghrib estimates that the recovery should be confirmed in the first months of the current year, thanks to the reopening of the borders at the beginning of February and the implementation of the emergency program by the government in the amount of 2 billion dirhams to support the sector. On the financial market, banks’ need for liquidity increased in the third month of the year. At the end of March, it amounted to 66.7 billion dirhams on average weekly against 64.2 billion dirhams a month earlier. The central bank emphasizes to this effect that its injections of liquidity have involved an amount of 77.5 billion dirhams. 35.3 billion dirhams were injected through 7-day advances against 21.5 billion dirhams in the form of repurchase agreements and 20.6 billion dirhams via guaranteed loans. “On the interbank market, the weighted average rate remained at 1.5% and the average daily volume of trade stood at 4.3 billion dirhams”, can we retain from the publication of Bank Al- Maghreb. And to continue that “on the other markets, the rates of Treasury bills did not experience significant variations in February as well on the primary compartment as on the secondary”.
With regard to the foreign exchange market, the central bank observes between February and March 2022 a depreciation of the dirham against the dollar (-3.77%). The national currency also depreciated by 0.87% against the euro. The volume of currency exchanges on the interbank market was around 26 billion dirhams for the second month of the year. It thus marks an increase of 2.1 billion dirhams compared to a month earlier. Similarly, the volume of bank transactions with customers amounted to an overall value of 29.2 billion dirhams for cash purchases against 22.9 billion dirhams a year earlier. Forward purchases amounted to 19.4 billion dirhams, an improvement compared to the level reached in the same period of the previous year (14 billion dirhams).
Regarding sales, the central bank shows a value of 29.2 billion dirhams for spot transactions and 7.2 billion dirhams for forward sales. Bank Al-Maghrib also points out that the banks’ net foreign exchange position showed a deficit of 6.2 billion dirhams in the second month of the year after a deficit of 5.1 billion dirhams recorded at the end of January 2022.