The IMF has sanctioned $496 million in funding for Morocco following a successful third review of its Resilience and Sustainability Facility arrangement. This funding aims to support Morocco’s transition to a green economy despite recent adverse events, including a major earthquake. Projections indicate modest growth, with an emphasis on necessary structural reforms to improve job creation and economic resilience.
On Tuesday, the International Monetary Fund (IMF) announced the release of $496 million in funding for Morocco. This decision reflects Morocco’s robust economic resilience, as highlighted by Kenji Okamura, the IMF’s deputy managing director and acting chairman, who praised the nation’s sound economic policies. The disbursement follows the successful completion of the third review of the Resilience and Sustainability Facility (RSF) arrangement for Morocco, bringing total funding under this arrangement to approximately $1.24 billion.
The 18-month RSF arrangement was approved in September 2023 to aid Morocco’s transition to a greener economy and to enhance the country’s resilience against natural disasters, particularly in light of the recent catastrophic 6.8-magnitude earthquake that resulted in nearly 3,000 fatalities. This represented Morocco’s most devastating earthquake in over sixty years and occurred shortly before the 2023 IMF and World Bank Annual Meetings designated for Marrakech.
The IMF’s executive board has projected a modest slowdown in Morocco’s economic growth to 3.2 percent for 2024, despite continued drought conditions. The country’s GDP is anticipated to rise by around 3.7 percent in the upcoming years, bolstered by structural reforms and new infrastructure initiatives. Mr. Okamura emphasized the importance of these reforms for fostering more robust, resilient, and inclusive growth that generates jobs.
Despite these optimistic projections, high unemployment rates remain a concern at approximately 13 percent, primarily due to challenges in the agricultural sector. On a positive note, inflation in Morocco has decreased, allowing the central bank to lower interest rates for the second consecutive time, bringing them down to 2.25 percent. The central bank projects an inflation rate of around 2 percent over the next two years.
An IMF mission in Rabat last month underscored the need for structural reforms to enhance job growth and noted that strong domestic demand is contributing positively to economic expansion. The IMF acknowledged advancements in Morocco’s tax system and the integration of climate change risk assessments into the medium-term fiscal framework. Progress in the Mohammed VI Investment Fund, intended to assist small and medium-sized enterprises with equity financing, was also recognized.
The completed third review is the final assessment within Morocco’s RSF programme, with six out of the seven outlined measures implemented. Mr. Okamura remarked on the potential of these measures to improve the management of scarce water resources, liberalize the electricity sector, and mitigate climate risks affecting fiscal and financial stability. However, the gradual introduction of a carbon tax remains pending due to the necessity for further impact analysis by Moroccan authorities.
In summary, the IMF’s approval of $496 million in funding signifies Morocco’s economic resilience and commitment to future growth through structural reforms. Despite facing challenges such as high unemployment and the aftermath of a devastating earthquake, Morocco’s strategic initiatives aim to foster a greener economy and boost job creation. The collaboration between Morocco and the IMF highlights the country’s ongoing efforts to strengthen its economic framework and resilience against future shocks.
Original Source: www.thenationalnews.com
