IMF Mission Chief for Morocco reports on Morocco’s positive economic outlook, fueled by reform:
The Moroccan economy is faring better due to significant progress in implementing economic reforms, but the country should sustain efforts to maintain gains and achieve higher and inclusive growth, the IMF said in its latest annual assessment of the economy and first review of the liquidity line that Morocco obtained from the global lender in 2014.
Speaking to IMF Survey, IMF Mission Chief for Morocco, Jean-François Dauphin, said that commendable progress was made, but the economy still faces significant risks that call for sustained implementation of reforms. The IMF is supporting the authorities’ economic program through a Precautionary and Liquidity Line, which serves as an insurance policy to protect the economy in case of severe external economic conditions.
IMF Survey: How is the Moroccan economy faring?
Dauphin: Economic imbalances have considerably reduced over the last three years. After significant external shocks hit the economy in 2011-12, the authorities have implemented a package of economic reform policies, supported by an IMF Precautionary and Liquidity Line, to help address economic vulnerabilities. In particular, they achieved a significant reduction in the fiscal deficit and moved ahead with an impressive reform of the subsidy system.
As a result, the current account deficit has also narrowed and foreign exchange reserves have increased. The emergence of new export sectors and the recent decline in international oil prices have also played a role in the rebalancing process.
In November 2014, the authorities adopted a new organic budget law, which—once comments from the constitutional council have been addressed—is expected to strengthen and modernize the budget framework. A new banking law was also adopted, which broadens the regulatory and supervisory role of Morocco’s Central Bank.
Nonetheless, the overall unemployment rate remained high at 9.7 percent at end 2014, with youth unemployment around 20 percent. And, much remains to be done to reduce income, gender and regional inequalities.
IMF Survey: What is your assessment of the country’s economic outlook?
Dauphin: We expect the Moroccan economy to strengthen going forward. In 2015, economic growth is expected to reach about 4½ percent, inflation is projected to remain low (around 1½ percent), while the fiscal deficit continues to narrow. Assuming steadfast implementation of structural reforms, growth could further accelerate and reach the 5-5½ percent range over the medium term…[Full Story]