The IMF has unlocked $496 million in funding for Morocco after approving the third review of its Resilience and Sustainability Fund arrangement. This support aims to enhance the country’s transition to a green economy following a recent devastating earthquake. Despite high unemployment and drought challenges, Morocco’s economy shows signs of resilience and projected growth.
The International Monetary Fund’s (IMF) executive board recently authorized the release of $496 million in funding for Morocco. This decision reflects Morocco’s robust economic resilience, with IMF Deputy Managing Director Kenji Okamura noting that the country has displayed positive responses to various adverse shocks, demonstrating the effectiveness of its economic policies.
The disbursement follows the completion of the third review of the Resilience and Sustainability Fund (RSF) arrangement established in September 2023, which aims to facilitate Morocco’s transition towards a green economy and enhance its preparedness for natural disasters. Following a devastating 6.8-magnitude earthquake that struck Morocco, resulting in nearly 3,000 fatalities, this funding is timely.
The IMF projected that Morocco’s economy would see only a modest growth slowdown to 3.2% in 2024, despite challenges such as ongoing drought conditions. Over the next few years, GDP growth is anticipated to reach approximately 3.7%, bolstered by structural reforms and infrastructure initiatives. Okamura emphasized that these reforms are essential to creating a more inclusive and job-rich economic environment.
Nevertheless, the IMF noted elevated unemployment rates, approximately 13%, primarily attributed to setbacks in the agricultural sector. Favorably, inflation has decreased, allowing Morocco’s central bank to initiate interest rate reductions, with the latest lowering rates to 2.25% from 2.5% and forecasting a further decline in inflation over the next two years.
Following a recent mission to Rabat, IMF staff highlighted the importance of structural reforms to strengthen job creation and underscored the positive impact of strong domestic demand on economic growth. They also commended Morocco’s tax policy reforms and the efforts to integrate climate change assessments into the fiscal framework. The Mohammed VI Investment Fund was recognized for its potential to enhance financial support for small and medium-sized enterprises.
The third review marked the final assessment of Morocco’s RSF program, with six out of seven planned measures successfully implemented. Okamura reiterated that these initiatives aim to improve water resource management, liberalize the electricity sector, and mitigate climate risks affecting fiscal stability and the financial system. A proposed carbon tax was not rolled out as further analysis is required.
In conclusion, the IMF’s approval of $496 million in funding underscores Morocco’s economic resilience and strategic commitment to reform. The financial support aligns with the nation’s objectives to transition to a sustainable economy while addressing the impacts of natural disasters and unemployment challenges. The success in implementing structural reforms is pivotal in fostering a stronger and more inclusive economic landscape for Morocco.
Original Source: www.thenationalnews.com
