As expected, the International Monetary Fund (IMF) has given the go-ahead for a flexible line of credit (LCM) in favor of Morocco for an amount equivalent to 5 billion dollars.
Given the solidity of Morocco’s economic policy and balance sheet frameworks, the board of directors of the international financial institution approved a two-year agreement earlier this week to prevent crises.
The Fund estimated that “Morocco meets the conditions required to benefit from this FCL due to its very solid economic policies, institutional frameworks and economic fundamentals, as well as its commitment to maintain these policies in the future”, it said. -we explained in a press release from the institution.
It is important to recall that this decision comes less than a month after a first meeting in an informal session during which the IMF examined the Moroccan authorities’ request for a two-year agreement under the FCL, for an amount equivalent to SDR 3.7262 billion (about 417 percent of Morocco’s quota, or $5 billion).
On the same occasion, the Managing Director of the IMF, Kristalina Georgieva, announced during the meeting that the Board of Directors has just held to take its decision her intention to recommend the approval of this agreement in favor of the Kingdom, which thus approved “will strengthen Morocco’s external reserves and provide temporary insurance against plausible extreme risks on a temporary basis”, according to the IMF, which specifies that the Moroccan authorities have indicated that they intend to treat this agreement as a precautionary device.
Indeed, “the authorities intend to consider the LCM scheme as a precautionary measure and to terminate it as soon as the 24-month period has elapsed, depending on the evolution of the risks”, declared Ms. Antoinette Sayeh, Deputy Managing Director of the IMF and Acting Chair of the Board, following the Executive Board’s deliberations on Morocco.
In her statement, the official also noted that “Morocco’s very strong macroeconomic policies and institutional framework have enabled its economy to remain resilient in the face of the multiple negative shocks that have occurred over the past three years, including the pandemic, the two droughts and the fallout from Russia’s war in Ukraine”.
According to her, “in the future, the Moroccan authorities remain determined to rebuild the room for maneuver of economic policy, to provide a comprehensive response to new shocks and to continue the implementation of the vast structural reforms necessary to make economic growth more stronger, more resilient and more inclusive”.
Regarding this resilience, Mrs. Antoinette Sayeh nevertheless drew attention to the fact that “the Moroccan economy remains vulnerable to a deterioration in the global economic and financial environment, to increased volatility in commodity prices and to recurring droughts.
In this context, she said, “the LCM agreement will strengthen Morocco’s external cushions and provide the country with additional insurance against extreme risks”.
While the LPL agreements have served the country well in the past, the very strong fundamental institutional frameworks, and economic track record in implementing very strong economic policies, as well as the continued commitment to maintaining those policies Future, the Monetary Fund believes that all of these factors justify the transition to an LCM agreement.
And for good reason: “an LCM agreement would help Morocco meet the challenge of rebuilding economic policy space, while accelerating the implementation of its structural reform program in an increasingly difficult external environment. risky,” he explained.
As a reminder, since 2012, Morocco has benefited from four successive agreements under the LPL, for an amount of approximately 3 billion dollars each.
As the IMF points out in its communiqué, the first LPL was approved on August 3, 2012, and three others were approved on July 28, 2014, July 22, 2016 and December 17, 2018.
Note that “the fourth LPL expired on April 7, 2020, when the authorities purchased all the resources available under the LPL to limit the social and economic impact of the COVID-19 pandemic and allow Morocco to maintain an adequate level of official reserves to ease pressures on the balance of payments,” the international institution explained.
Alain Bouithy