The IMF concluded the 2025 Article IV Consultation with Morocco, approving a SDR 375 million disbursement under the RSF arrangement. Despite another drought year, Morocco’s GDP growth is projected to moderately slow to 3.2% in 2024, with expectations of acceleration to 3.7% driven by investment and structural reforms. Improving fiscal buffers and tackling unemployment linked to agriculture remains critical.
The International Monetary Fund (IMF) has concluded its 2025 Article IV Consultation with Morocco, approving the Third Review under the Resilience and Sustainability Facility (RSF) arrangement. This decision allows for an immediate disbursement of SDR 375 million (approximately US$ 496 million) to Morocco. Despite experiencing another year of drought, the Moroccan economy has displayed resilience, with real GDP growth expected to decelerate slightly to 3.2 percent in 2024, bolstered by strong domestic demand.
Looking ahead, it is anticipated that Morocco’s economic growth will accelerate to 3.7 percent over the medium term, fueled by increased investment and ongoing structural reforms. To enhance fiscal resilience and prepare for future economic shocks, the government should consider saving a portion of the revenue from recent tax reforms. Additionally, developing a strategy to sustainably create jobs and enhance market competition will be crucial in addressing rising unemployment rates, particularly due to job displacements in agriculture.
The IMF report indicates that the Moroccan economy demonstrated significant resilience in 2024, despite the adverse impacts of another drought year. Although the current account deficit has widened, the unemployment rate remains high at approximately 13 percent. Inflation is projected to soften as supply shocks diminish, prompting Bank Al-Maghrib (BAM) to implement policy rate reductions in June and December of the same year. The Moroccan dirham has remained stable within its fluctuation band of ±5 percent.
Fiscal performance has also exceeded initial expectations, with the central government recording a fiscal deficit of 4.1 percent of GDP in 2024, which is 0.2 percent lower than initially projected. This improvement has been attributed to higher-than-expected tax revenues, which balanced out increased expenditure. Ongoing reforms under the Organic Budget Law seek to establish a new fiscal rule centered around a medium-term debt anchor.
Progress in implementing the structural reform agenda continues, with notable advancements in reforming State-Owned Enterprises (SOEs), launching the Mohammed VI Investment Fund, and operationalizing the new Charter of Investment. Moreover, significant strides have been made to enhance climate change resilience under the RSF arrangement, including initiatives to protect groundwater resources and improve the regulatory framework for renewable energy production.
In a statement following the Executive Board’s assessment, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair of the IMF, emphasized Morocco’s capacity to weather economic shocks, attributing it to robust economic policies and frameworks. He noted that despite the drought, the economy’s activity has been resilient, with forecasts indicating potential growth driven by infrastructure investments and structural reforms conducive to more inclusive growth.
The IMF’s approval of the Third Review under the RSF arrangement signifies Morocco’s ongoing economic resilience amid challenges such as drought. With a focus on enhancing fiscal buffers and addressing unemployment, Morocco’s economic outlook appears promising, characterized by strong domestic demand and anticipated growth in investment. The government’s commitment to structural reforms and climate resilience solidifies a pathway to sustainable development.
Original Source: www.miragenews.com
