São Paulo – Improvement in budget management and diversification of the economy should drive Morocco to increase growth in 2017. A preliminary report by a staff team of the International Monetary Fund (IMF) at the end of a visit indicates that these two factors will strengthen Morocco’s capacity for growth, with the country’s Gross Domestic Product (GDP) expected to grow 4.4% next year against 1.5% to 2% this year.
IMF’s staff team, headed by Nicolas Blancher, visited the country from November 16 to December 1 to perform an analysis of Morocco’s economic performance and discuss the first review made under the Precautionary and Liquidity Line (PLL), a credit line that the Fund provides to countries in crisis and that was approved to Morocco in an agreement in July 2014 carrying the amount of USD 3.5 billion.
In the report made public this Thursday (1), the IMF’s staff team praised the country’s recent public pension reform and the improvements in the public finances determined by the 2017 draft budget.
Blancher said that Morocco took advantage of the continuity of prudent macroeconomic policies and structural reforms, plus the improvement in oil prices that favored the country.
However, he reminds that there’s still many thing yet to be done for a larger, more sustainable and inclusive growth. Unemployment is still high in the country, especially among the youth, and there’s still a need to improve the quality of education, the functioning of the labor market, women’s participation in labor force and the business environment.
Despite the dynamism of new export sectors, the economy and the current account were hampered this year by the increase in foodstuffs and capital goods imports, and by the price decline of phosphate, an export product of Morocco. The country also faced problems with its crop, but the IMF team expects the agricultural sector to recover.
According to the Fund, the country is still facing high risks associated with growth in the advanced and emerging market economies, with energy prices, with geopolitical tensions in the region and with the volatility of financial markets.
The IMF’s staff team declared that it supports the government’s plan to initiate a gradual transition to a more flexible exchange rate regime and the adoption of inflation targets. The Fund believes that this will allow for a greater integration into the global economy, preserving the country’s competitiveness and strengthening its capacity to absorb external shocks.
*Translated by Sérgio Kakitani
