The IMF completed the 2025 Article IV Consultation with Morocco, allowing a disbursement of SDR 375 million. The economy exhibited resilience despite drought, with projected GDP growth at 3.2% for 2024. Structural reforms and fiscal strategies are essential for addressing unemployment and safeguarding against economic shocks. Government fiscal deficit improved and inflation decreased, supporting further investment and reforms.
The International Monetary Fund (IMF) Executive Board has concluded the 2025 Article IV Consultation and the Third Review under the Resilience and Sustainability Facility (RSF) arrangement with Morocco. This outcome permits the immediate disbursement of SDR 375 million (approximately US$ 496 million), contributing to a total disbursement of SDR 937.5 million (about US$ 1.24 billion) under the RSF arrangement.
Despite another year marked by drought, the Moroccan economy demonstrated resilience, with real GDP growth projected to modestly slow to 3.2 percent in 2024, buoyed by strong domestic demand. The medium-term outlook shows an anticipated acceleration in growth to approximately 3.7 percent, fueled by increased investments and the ongoing structural reform initiatives.
In light of recent tax reforms, it is advised to save a portion of the revenue windfall in order to enhance fiscal buffers and mitigate future risks. Additionally, introducing a new strategy focused on job creation and improved market competition is essential for addressing the rise in unemployment, particularly in the agriculture sector due to job displacement.
The IMF’s review noted that robust domestic demand helped mitigate the impacts of reduced agricultural output. The current account deficit has expanded, and unemployment levels are notably high at around 13 percent due to losses in agricultural employment. Inflation rates have been declining, prompting Bank Al-Maghrib to adjust the policy rate downwards during June and December.
The central government achieved a fiscal deficit of 4.1 percent of GDP in 2024, exceeding earlier expectations due to unexpected increases in tax revenues that balanced higher expenditures. The Organic Budget Law reform proposes a new fiscal framework anchored in medium-term debt management.
Progress continues in Morocco’s structural reforms, including the restructuring of State-Owned Enterprises (SOEs) and the operationalization of the Mohammed VI Investment Fund, alongside the enactment of the new Charter of Investment. Under the RSF arrangement, Morocco is also advancing initiatives to bolster resilience against climate change by protecting underground water resources and improving regulatory frameworks for renewable energy production.
Mr. Kenji Okamura, Deputy Managing Director and Acting Chair of the IMF, remarked on Morocco’s economic resilience despite ongoing drought conditions, noting that the economy expanded moderately, supported by robust domestic demand and a series of infrastructural projects. Okamura emphasized the importance of continued structural reforms to solidify economic growth and inclusiveness. He also pointed out that six out of seven planned measures under the RSF arrangement were successfully implemented, although the introduction of a carbon tax is pending further analysis and stakeholder engagement.
In conclusion, the IMF’s 2025 Article IV Consultation with Morocco indicates a resilient economy amid challenging conditions, with a modest growth forecast and the successful implementation of key reforms. The approved disbursement under the RSF facilitates continued investment in critical areas. Strengthening fiscal policies and enhancing market employment will be crucial as Morocco navigates future economic challenges, particularly in light of climate change effects. Continued structural reforms will further bolster economic stability and inclusiveness.
Original Source: www.miragenews.com
