What the IMF Recommends for Morocco in 2013
30 December 2012
Read by 1394 persons
Current programs aimed at strengthening competitiveness, growth, employment, and public finance rebalancing, as well as monetary and financial policies, remain appropriate. However, according to the IMF, the Kingdom must undertake urgent reforms to stay on track in a challenging external environment. Details of the recommendations.
Morocco remains on a good trend with the various programs currently underway. Not only in economic and financial terms, but also regarding projects that broadly support the country's development process. However, the country faces a difficult international situation and, therefore, constraints that require it to be more vigilant and take urgent measures to overcome a difficult hurdle and thus remain on the path of progress. This is the lesson that can be drawn from the recent statement by a team from the International Monetary Fund (IMF), which carried out a working visit to Morocco from December 5 to 18. The aim of this mission was to conduct consultations with the Moroccan authorities planned for 2012 within the framework of cooperation (Article IV of the IMF's Articles of Agreement) between the Bretton Woods institution and the Kingdom of Morocco. In focus: the Precautionary and Liquidity Line (PLL) granted to the country last August by the Fund.
The mobilization and vigilance advocated by the IMF must, according to the latter, be based in particular on maintaining current programs, but also on accelerating their implementation. Thus, the Fund expects external pressures to persist. It does not rule out a further deterioration of the international environment. In this context, IMF analysts indicate that the Moroccan authorities' action plan remains appropriate.
It is, it should be remembered, supported by the PLL and includes structural measures aimed at strengthening competitiveness, potential growth, and employment, rebalancing public finances, and prudent monetary and financial policies. However, the IMF team nuances, "it is becoming increasingly urgent to implement the necessary reforms so that Morocco can maintain its performance in the face of a difficult external environment." Similarly, it is added, the Kingdom has made considerable progress in strengthening growth and reducing poverty over the past decade.
However, the same specialists explain, the country still has a long way to go, particularly in reducing unemployment, mainly among young people, and improving social indicators such as literacy rates, equal access to basic infrastructure and health and education services.
Concretely, according to the IMF, this involves taking structural measures to "promote stronger and more inclusive growth, through reforms of product and labor markets, investment in human and physical capital, and improvement of the business environment."
The IMF team's assessment also covered public finances, which, it insists, must remain viable in the medium term. And here too, while highlighting the government's good orientation, the Fund calls for an acceleration of the pace of action. "The budgetary orientation of the 2013 Finance Bill is appropriate. However, the viability of public finances in the medium term depends on the implementation of essential structural reforms that will also make it possible to free up budgetary room for maneuver to improve social protection and invest more in human capital and infrastructure," it is indicated. In short, this concerns the reform of the subsidy system, described as "indispensable and urgent." And for good reason, the current system undermines budgetary resources and is an inefficient means of supporting populations in need, according to the IMF. The same applies to the reform of the pension system, which "is also urgent" to ensure its sustainability and preserve the viability of public finances in the medium and long term.
Competitiveness, exchange rate, and access to credit
IMF services insist, among other things, on strengthening competitiveness, improving the business climate, and investing in education and training. Similarly, they recommend greater exchange rate flexibility to support competitiveness and absorb external shocks. Regarding the banking sector, it is emphasized that it has proven resilient to the global crisis and that its overall situation remains sound.
The IMF says it supports Bank Al-Maghrib's efforts to continue strengthening banking regulation and supervision, including through the gradual adoption of Basel III standards, while calling for wider access to credit.
GDP growth in Morocco is expected to be around 3% in 2012, even if non-agricultural growth remains at 4.5%.
The current account deficit is expected to exceed 8% of GDP, although reserves have stabilized at around 4 months of imports.
The budget deficit is expected to fall to around 6% of GDP, thanks in particular to the adjustment in June 2012 of the prices of subsidized products.
Inflation is expected to remain low, at 1.3% in 2012, despite price increases. At nearly 9%, the unemployment rate is stable and remains particularly high among young people.
Lahcen Oudoud.
Lematin.ma
Published December 27, 2012.
Posted online December 30, 2012.
Morocco remains on a good trend with the various programs currently underway. Not only in economic and financial terms, but also regarding projects that broadly support the country's development process. However, the country faces a difficult international situation and, therefore, constraints that require it to be more vigilant and take urgent measures to overcome a difficult hurdle and thus remain on the path of progress. This is the lesson that can be drawn from the recent statement by a team from the International Monetary Fund (IMF), which carried out a working visit to Morocco from December 5 to 18. The aim of this mission was to conduct consultations with the Moroccan authorities planned for 2012 within the framework of cooperation (Article IV of the IMF's Articles of Agreement) between the Bretton Woods institution and the Kingdom of Morocco. In focus: the Precautionary and Liquidity Line (PLL) granted to the country last August by the Fund.
The mobilization and vigilance advocated by the IMF must, according to the latter, be based in particular on maintaining current programs, but also on accelerating their implementation. Thus, the Fund expects external pressures to persist. It does not rule out a further deterioration of the international environment. In this context, IMF analysts indicate that the Moroccan authorities' action plan remains appropriate.
It is, it should be remembered, supported by the PLL and includes structural measures aimed at strengthening competitiveness, potential growth, and employment, rebalancing public finances, and prudent monetary and financial policies. However, the IMF team nuances, "it is becoming increasingly urgent to implement the necessary reforms so that Morocco can maintain its performance in the face of a difficult external environment." Similarly, it is added, the Kingdom has made considerable progress in strengthening growth and reducing poverty over the past decade.
However, the same specialists explain, the country still has a long way to go, particularly in reducing unemployment, mainly among young people, and improving social indicators such as literacy rates, equal access to basic infrastructure and health and education services.
Concretely, according to the IMF, this involves taking structural measures to "promote stronger and more inclusive growth, through reforms of product and labor markets, investment in human and physical capital, and improvement of the business environment."
The IMF team's assessment also covered public finances, which, it insists, must remain viable in the medium term. And here too, while highlighting the government's good orientation, the Fund calls for an acceleration of the pace of action. "The budgetary orientation of the 2013 Finance Bill is appropriate. However, the viability of public finances in the medium term depends on the implementation of essential structural reforms that will also make it possible to free up budgetary room for maneuver to improve social protection and invest more in human capital and infrastructure," it is indicated. In short, this concerns the reform of the subsidy system, described as "indispensable and urgent." And for good reason, the current system undermines budgetary resources and is an inefficient means of supporting populations in need, according to the IMF. The same applies to the reform of the pension system, which "is also urgent" to ensure its sustainability and preserve the viability of public finances in the medium and long term.
Competitiveness, exchange rate, and access to credit
IMF services insist, among other things, on strengthening competitiveness, improving the business climate, and investing in education and training. Similarly, they recommend greater exchange rate flexibility to support competitiveness and absorb external shocks. Regarding the banking sector, it is emphasized that it has proven resilient to the global crisis and that its overall situation remains sound.
The IMF says it supports Bank Al-Maghrib's efforts to continue strengthening banking regulation and supervision, including through the gradual adoption of Basel III standards, while calling for wider access to credit.
GDP growth in Morocco is expected to be around 3% in 2012, even if non-agricultural growth remains at 4.5%.
The current account deficit is expected to exceed 8% of GDP, although reserves have stabilized at around 4 months of imports.
The budget deficit is expected to fall to around 6% of GDP, thanks in particular to the adjustment in June 2012 of the prices of subsidized products.
Inflation is expected to remain low, at 1.3% in 2012, despite price increases. At nearly 9%, the unemployment rate is stable and remains particularly high among young people.
Lahcen Oudoud.
Lematin.ma
Published December 27, 2012.
Posted online December 30, 2012.
