The IMF Executive Board concluded the 2025 Article IV Consultation for Morocco, approving a disbursement of SDR 375 million under the RSF arrangement. Despite drought, real GDP growth is projected to decline to 3.2 percent in 2024 but expected to rebound to 3.7 percent in the medium term. The review highlights improvements in fiscal health and initiatives to enhance climate resilience, alongside ongoing structural reforms.
The International Monetary Fund (IMF) Executive Board successfully concluded the 2025 Article IV Consultation and approved the Third Review under the Resilience and Sustainability Facility (RSF) for Morocco. This decision allows for the immediate disbursement of SDR 375 million, approximately US$ 496 million, facilitating Morocco’s ongoing economic recovery amidst challenges.
Despite facing another year marked by drought, the Moroccan economy continues to exhibit resilience, with real GDP growth expected to modestly decrease to 3.2 percent in 2024 due to robust domestic demand. Medium-term projections indicate a ramp-up to around 3.7 percent growth, bolstered by heightened investment and the continued execution of structural reforms.
In light of fiscal policy, saving revenue from tax reforms will enhance fiscal buffers to mitigate future shocks. Additionally, introducing a new strategy targeting sustainable job creation and improved market competition will address the heightened unemployment associated with job displacement in the agricultural sector.
The Executive Board officially discussed these developments on March 17, noting that the current account deficit has somewhat widened while unemployment remains high at approximately 13 percent. However, inflation has slowed down due to the easing of supply shocks, leading Bank Al-Maghrib to reduce the policy rate twice in late 2024.
Fiscal health has improved, with the overall deficit closing the year at 4.1 percent of GDP, slightly better than projections. This outcome reflects higher-than-expected tax revenues countering increased expenditures. Moreover, reforms to the Organic Budget Law aim to establish a new fiscal rule centered on a medium-term debt anchor.
In regards to climate resilience, Morocco has made headway under the RSF arrangement, with initiatives geared towards safeguarding water resources, adjusting water tariffs, liberalizing the electricity sector, and enhancing systems to withstand climate-related financial risks. Deputy Managing Director Mr. Kenji Okamura affirmed the importance of these reforms for fostering resilient, inclusive economic growth, despite ongoing environmental challenges.
Overall, the implementation of six out of seven targeted measures under the RSF highlights Morocco’s commitment to strengthening its economic framework and addressing climate risks, although the carbon tax’s gradual roll-out has been delayed pending further analyses and stakeholder consultations.
In conclusion, the IMF’s recent review of Morocco underscores the country’s economic resilience despite persistent drought conditions. The approval of the disbursement under the RSF arrangement, coupled with sustained structural reforms and fiscal improvements, positions Morocco for moderate economic growth. By focusing on enhancing fiscal buffers and promoting employment, Morocco aims to navigate future challenges effectively while bolstering its resilience against climate change.
Original Source: www.miragenews.com
