“To prevent any de-anchoring of inflation expectations and to encourage the return of inflation to rates in line with the objective of price stability, the Council decided to raise the key rate by 50 basis points to 2.50%,” BAM explained in a press release published at the end of the 4th and final quarterly meeting for the year 2022, noting that the Central Bank will continue to closely monitor the economic situation and inflationary pressures, both nationally and internationally.
During this meeting, the Council analyzed the recent developments in the international economic situation and noted that it remains marked by the stalemate in the conflict in Ukraine, geopolitical and economic fragmentation and the after-effects of the pandemic, the same source said.
Despite signs of its easing in some countries, inflation remains very high overall, leading central banks to continue the largely synchronized tightening of their monetary policies, BAM added, stressing that as a result, the outlook for the global economy continues to deteriorate with a sharp deceleration in growth expected in 2023.
At the national level, the Council indicates that this environment weighs on economic activity and on the evolution of inflation, which will have to continue to record high rates for a much longer period than expected in September, impacted in particular by external pressures spreading to non-tradable goods and services and by the implementation of the reform of the compensation system from 2024.
Bank Al-Maghrib’s projections now predict an acceleration in inflation to 6.6% in 2022, after 1.4% in 2021, driven mainly by the acceleration in the rise in food and fuel and lubricant prices. It would then average 3.9% in 2023 before recording a new rebound in 2024 to 4.2%, in connection with the planned decompensation of prices of subsidized products.
Regarding growth at the national level, BAM specifies that after the 7.9% rebound recorded in 2021, it would mark a clear slowdown this year to 1.1%, the result of a 15% decline in agricultural value added and a deceleration to 3.4% in the pace of non-agricultural activities.
In 2023, it would accelerate to 3%, driven by the 7% increase in agricultural value added, assuming a return to average cereal production, while growth in non-agricultural activities would slow to 2.4%, suffering in particular from the deterioration of the external environment, estimates BAM, stressing that in 2024, growth would be 3.2%, covering increases of 1.8% in agricultural value added, assuming average agricultural production, and 3.5% in non-agricultural activities.
In terms of external accounts, the Council notes that the year 2022 is marked by strong trade dynamics and a notable increase in travel receipts and transfers from MREs.
In this respect, exports would thus show an improvement of 32.3%, driven mainly by sales of phosphate and derivatives, thanks to the increase in prices, and those of the automobile sector. Their progression would decelerate to 2.7% in 2023, with declines for phosphate and derivatives and agricultural and agri-food products, before a virtual stagnation in 2024.
At the same time, imports would increase by 38.4% in 2022, mainly covering a 102.1% increase in the energy bill to 153.2 billion dirhams, an increase in purchases of semi-finished products and a rebound of 89.9% to 27.2 billion dirhams in wheat supplies, specifies the Central Bank, stressing that they should fall by 3% in 2023, with in particular decreases of 13% in the energy bill and 41.2% in wheat supplies, then increase by 1.1% in 2024.
Regarding travel revenues, they would end the year with a record jump to 88.8 billion dirhams after 34.3 billion in 2021, and would experience virtual stagnation in 2023 then an improvement of 5.5% to 94.1 billion in 2024.
For their part, transfers from MREs would increase by 12.9% to 105.8 billion dirhams in 2022, would fall by 4% to 101.5 billion in 2023, due in particular to the deterioration of economic conditions in the host countries, then would increase to nearly 104 billion dirhams in 2024.
And to continue that under these conditions, the current account deficit would widen from 2.3% of GDP in 2021 to 3.3% in 2022 before decreasing to 2.1% in 2023 then to 1.9% in 2024. Concerning FDI, revenues would be around the equivalent of 3% of GDP this year and 3.2% of GDP annually over the next two years.
In total, and assuming in particular the materialization of the Treasury’s forecast external financing, official reserve assets would amount to 341.7 billion dirhams in 2022 before rising to 362.9 billion at the end of 2023 and then to 371 billion in 2024. They would thus represent the equivalent of 5 months and 18 days of imports of goods and services in 2022 and almost 6 months at the end of 2023 and 2024.
Regarding monetary conditions, the strong appreciation of the dollar against the euro is reflected in the nominal effective exchange rate of the dirham, which is expected to depreciate by 1.7% in 2022, before recording an appreciation of 2% in 2023, then stabilize in 2024. Taking into account inflation differentials between Morocco and its main partners and competitors, this rate would depreciate in real terms by 3.2% in 2022 and then gradually appreciate by 0.3% in 2023 and 1.9% in 2024, estimates BAM.
On the same note, BAM’s projections continue to show the absence of signs of misalignment of the dirham with the fundamentals of the national economy. As for lending rates, they experienced a slight decrease of 5 basis points in the third quarter, covering a decline of 46 basis points for equipment loans, increases of 9 points for liquidity facilities and 7 points for consumer loans, as well as stability in those of housing loans.
Regarding bank credit to the non-financial sector, driven by the increase in cash loans to private companies, it recorded a gradual acceleration with an increase of 6.3% in October and should end the year with an increase of 5.1%, a rate that would decelerate to 3.3% in 2023 and then accelerate again to 5.5% in 2024. Regarding the liquidity requirement of banks, it would be around 90 billion dirhams at the end of this year and 2023 before increasing to more than 100 billion at the end of 2024.
In terms of public finances, the budget execution at the end of the first eleven months of the year shows an improvement of 25.6% in ordinary revenue, driven mainly by the notable increase in tax revenues and the strong increase in revenues from specific financing mechanisms.
At the same time, overall expenditure increased by 15.9%, reflecting in particular the increase in the compensation charge. Taking into account these achievements, the data from the 2023 Finance Act and the multi-year budget programming (2023-2025), the budget deficit should, according to BAM projections, gradually decrease, returning from 5.9% of GDP in 2021 to 5.3% in 2022 before decreasing to 4.6% in 2023 and 4% in 2024.
Finally, the Board validated the Bank’s budget for the financial year 2023, approved the foreign exchange reserves management strategy and the internal audit program and set the dates of its regular meetings for the same year as March 21, June 20, September 26 and December 19.
2024-08-22 02:19:44