While waiting for the FATF report, the IMF eloquent towards the Kingdom

According to the International Monetary Fund (IMF), Morocco, which went through a year of unfavorable particular and general economic conditions, ultimately came out of it well. This is the finding delivered in the IMF report following the consultations of its 2022 Board of Directors under Article IV with the Kingdom.

Morocco is doing eloquently therefore, if one can say so, thanks to a very firm political response from the authorities, to overcome the harmful fallout that weighed on the Moroccan and world economy and which triggered inflationary pressures in many countries, including the Kingdom.

Firm but also fast, the reaction of the authorities (through subsidies that stabilized the price of wheat and gas, fixed electricity tariffs, cash transfers to the transport sector and subsidized credit programs to the agricultural sector).

We will in no way conceal thehe Moroccan central bank reacted by tightening the monetary policy stance somewhat. Bank Al-Maghrib (BAM) indeed raised its key rate by 50 basis points to 2% in September, citing the risk that persistently high inflation levels could de-anchor inflation expectations and trigger an auto inflationary spiral. -maintained. The IMF will indicate that the dirham has depreciated against the dollar and the euro (by about 15 and 6%, respectively), approaching the upper side of its fluctuation band ±5%.

In short, without bathing too much in euphoria, the time remains however for optimism on the part of the administrators of the Fund, in the perspective of course of a return to normal internally, and of a stabilization or even an improvement in external economic conditions. The IMF also praises the government’s rich program of structural reforms and hopes for its continuation for a rebound in economic activity during the current financial year in order to stabilize it around 3.5% in the medium term.

Inflation, which was well felt in 2022, should fall this year depending on the dissipation of commodity price shocks and in the prospect that Bank Al Maghrib reduces the easing of monetary policy to accumulate towards 4 %. The Fund has put a damper on the exchange, faulty in these eyes of a trade deficit in 2022.

However, the IMF predicts a nice improvement from 2023, thanks to bright spots through large remittances and tourist arrivals, as well as higher tax revenues, coming from corporate income tax (due to the stronger than expected economic recovery in 2021), while VAT and customs revenues were boosted by higher inflation.

The Institution, with regard to budgetary policy, considers that the 2023 budget is a necessary balance for the purposes of reducing the deficit, mitigating the social and economic impact of shocks and financing the structural reforms implemented or coming. The Fund adds that the Kingdom must deploy new fiscal measures to accelerate the reduction of public debt and rebuild budgetary reserves.

However, there remains one component that haunts people’s minds and breaks the atmosphere and which presents itself as the famous grain of sand that jams the machine. While the IMF praises Morocco’s progress in improving the framework for financial supervision and regulation, the Fund’s loans to Kingdom remain suspended from the expert report of the Financial Action Task Force (FATF) after a field visit and assessment which has just ended.

If the latter proves favorable, Morocco will then be removed from the FATF’s gray list during the plenary next February.

The IMF relies for this purpose on the statements of the National Financial Intelligence Authority (ANRF) which considered this visit in the fieldin accordance with the regulatory procedures approved by the FATF and reflects the belief that Morocco has complied with all the axes included in the action plan in question“.

Moreover, the administrators of the Institution who welcomed the completion by the authorities of the action plan designed with the FATF of the IMF underline, while encouraging progress towards the exit from the gray list that it is essential to persist in the monitoring of balance sheet exposures of financial institutions.

That said, the IMF, which on Tuesday acknowledged the efforts made by the authorities in its report, also fully welcomes several reforms currently being carried out by the Executive, which moreover the Fund is highlighting, cited in this as those of the social protection, health and education.

They would improve equity and quality of access, better target spending and support long-term human capital, as well as reduce dependence on fossil fuels, addressing water scarcity and reducing gender inequalities,” believes the financial institution, adding that “state-owned enterprise reforms and other initiatives aimed at boosting private investment would spur private sector growth“.

Previous Post Next Post