The International Monetary Fund (IMF) commended, on January 24, 2023, Morocco for its strong policy response to mitigate the social and economic impact of recent negative shocks related to the war in Ukraine and drought. This is the substance of the communiqué issued Tuesday in Washington at the conclusion of its 2022 Article IV Board of Executive Directors’ consultations with Morocco.
While noting that the baseline projections are subject to “unusually high uncertainty,” mainly related to worsening global conditions and greater spillovers from Russia’s war in Ukraine, the IMF nonetheless projects that “Morocco’s GDP growth is expected to accelerate to 3 percent in 2023, driven mainly by the rebound in agricultural production and its positive spillovers to the rest of the economy.
According to the same source, “inflation should, moreover, gradually decline to about 4 percent in 2023”, “as the commodity price shock gradually dissipates and the monetary stance becomes less accommodating”.
The current account deficit should, meanwhile, narrow to its norm of about 3% of GDP in the medium term, “boosted by structural reforms,” said the international financial institution.
In its statement, the IMF notes, also, that despite the increase in current expenditure due to increased subsidies and other public measures that have mitigated the economic impact of shocks, “the overall budget deficit should fall in 2022, noting in this regard the good performance of both tax and non-tax revenues.
In addition, while commending the Moroccan authorities for the “very strong policy response” that has mitigated the social and economic impact of recent negative shocks, IMF Executive Directors said that while risks to the economic outlook are tilted to the downside, “continued strong policies and rapid implementation of reforms are likely to support economic activity going forward.
Referring to the 2023 Finance Law, they noted that “the budget strikes a balance between the need to reduce the deficit, mitigate the social and economic impact of shocks, and finance structural reforms.
The IMF also welcomed “the progress made” by Morocco in improving its financial supervision and regulatory framework, while highlighting its “strong commitment” to implementing comprehensive structural reforms.
“Reforming social protection, health, and education systems would improve equity and quality of access, better target spending, and sustain human capital over the long term,” the statement concluded.