São Paulo – The International Monetary Fund (IMF) announced last Monday evening (28th) the approval of a new 24-month loan agreement with Morocco, as part of a precautionary and liquidity line (PLL), in the amount of US$ 5 billion. In agreements of this sort, the funds are made available to the country but the latter is not obliged to draw on them. <\/p>\n
Morocco had entered into a similar deal with the Fund in August 2012, worth US$ 6.21 billion. As per the new agreement, US$ 4.5 billion will be offered within the first year, rising in the second year to a cumulative US$ 5 billion.<\/p>\n
According to an IMF press release, Moroccan authorities have stated that they intend to treat the arrangement as precautionary, as was the case with the 2012 deal, unless the country experiences balance of payments needs stemming from an eventual deterioration of external conditions.<\/p>\n
The deal acts as an “insurance” against external shock. The Fund believes it should allow the government to go on implementing a reform program designed to foster “higher, more inclusive growth.” <\/p>\n
IMF deputy managing director Noayuki Shinohara has said, according to the press release, that the international economy remains subject to significant downside risks. <\/p>\n
“Protracted and slower–than-expected growth in Europe than currently projected, heightened financial market volatility, or a surge in oil prices resulting from geopolitical tensions could significantly affect the Moroccan economy,” he said. <\/p>\n
The director commended the “significant progress made in reforming the subsidy system.” One of the aspects of Arab economies most widely criticized by international financial bodies is the practice of granting consumer subsidies to products and services, particularly energy and fuels. This is believed to place too high a burden on government coffers, with little to no effect in social development and economic growth.<\/p>\n
“Advancing structural reforms to improve the business climate, the judicial system, access to finance, and the labour market will be crucial to achieving higher growth and employment,” Shinohara added.<\/p>\n
*Translated by Gabriel Pomerancblum<\/strong><\/p>\n