IMF Optimistic About Morocco's Economic Growth in 2013
11 February 2013
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Following the confirmation of the continuation of the precautionary and liquidity line agreement ("PLL") approved in August 2013 by the IMF, it has just published an information note on the Moroccan macroeconomic situation in which it praises the economic and fiscal policies implemented in the Kingdom.
The International Monetary Fund once again testifies to Morocco's good economic health. Following the IMF's confirmation of the continuation of the precautionary and liquidity line agreement 'PLL' approved in August 2013, it has just published an information note on the Moroccan macroeconomic situation, where it praises the economic and fiscal policies implemented in the Kingdom.
According to this note, they are "solid" to face current internal and external shocks that occur in "a context of pressing social demands." The IMF expects a slowdown in GDP growth in 2012 to around 3.2%, mainly due to a poor agricultural harvest, while non-agricultural GDP should remain solid at around 4.5%. "Over the past ten years, Morocco's generally sound macroeconomic policy has enabled the country to achieve very good growth. This prolonged period of good economic results has recently been called into question by a deterioration in the external environment and a below-average harvest," specifies the institution's board of directors.
IMF Announces 4.5% Increase in GDP
The country has made enormous progress in reducing poverty, despite rising unemployment, according to the same source. Regarding the reform of the compensation system, the IMF calls on the Moroccan authorities to "move resolutely" on this project in order to promote medium-term fiscal adjustment and better target the most vulnerable social groups. In 2013, the IMF remains optimistic about economic growth in Morocco, even with the possible decline recorded in 2012 due to various external and internal shocks, says Mr. Masood Ahmed, director of the Middle East and Central Asia Department at the IMF. In this regard, a recovery of the economy was observed by the head of the IMF from the first month of 2013. The IMF forecasts progress of around 4.5%. These growth projections correspond to those announced by the central bank. For Bank AlMaghrib, GDP growth should be between 4% and 5% in 2013, assuming average cereal production and the persistence of unfavorable international economic prospects. The fund also expects a decrease in the budget deficit, in accordance with the medium-term reform agenda implemented by the government. It also noted that this agenda aims essentially to remedy certain "vulnerabilities", in particular the reduction of deficits, the improvement of economic productivity and more inclusive growth, welcoming the fact that one of the strengths of this economic program remains its "proven ability to attract foreign private financing." The director of the Middle East and Central Asia Department at the IMF recalled that the agreement concluded last August with Morocco on a precautionary and liquidity line (PLL) of nearly $6.3 billion was precisely in support of this economic program. Inflation, meanwhile, remained low despite the increase in several subsidized energy products in June 2012, as part of government efforts to contain the budgetary cost of subsidies. Despite relatively strong growth, unemployment has remained at around 9% since 2010. According to IMF estimates, real GDP should range from 4.5% to 5.8% between 2013 and 2018.
Appropriate Monetary Policy
The council also stressed "the importance of moving forward with the reform of the pension system to ensure its viability" and encouraged a "prudent approach to fiscal decentralization in order not to increase fiscal risks." Regarding the reform of the tax code, the fund welcomed the government's plan to reduce the ratio of the wage bill to GDP and to accelerate tax reform, believing that "clear communication and quality social dialogue will be crucial for the success of the implementation of the tax reform agenda." The IMF is of the opinion that the current monetary policy is appropriate. To this end, it encourages the authorities to soften the exchange rate to strengthen external competitiveness and shock absorption capacity, in coordination with other macroeconomic and structural policies. It also recommends redoubling efforts to promote higher and more inclusive growth, particularly by creating jobs for young people and reducing inequalities in income distribution and access to health care and education. In conclusion, the fund considers the financial sector "sound" overall. It congratulates the authorities for their efforts to further strengthen the regulation and supervision of the financial sector, particularly given the growing international exposure of Moroccan banks. In this regard, it suggests an update of the financial sector assessment program. It also encourages the authorities to strengthen legislation relating to money laundering and terrorist financing, as well as to intensify reforms aimed at promoting the expansion of financial circuits.
A Slight Acceleration of Global Growth in 2013
Global growth is expected to reach 3.5% in 2013, compared to 3.2% in 2012. The main sources of this economic recovery originate from emerging countries, developing countries and the United States. The IMF specifies that the risks of crisis are decreasing, but the risks of deterioration remain considerable.
Lesoir-echos.com
Published February 11, 2013.
Posted online February 11, 2013.
The International Monetary Fund once again testifies to Morocco's good economic health. Following the IMF's confirmation of the continuation of the precautionary and liquidity line agreement 'PLL' approved in August 2013, it has just published an information note on the Moroccan macroeconomic situation, where it praises the economic and fiscal policies implemented in the Kingdom.
According to this note, they are "solid" to face current internal and external shocks that occur in "a context of pressing social demands." The IMF expects a slowdown in GDP growth in 2012 to around 3.2%, mainly due to a poor agricultural harvest, while non-agricultural GDP should remain solid at around 4.5%. "Over the past ten years, Morocco's generally sound macroeconomic policy has enabled the country to achieve very good growth. This prolonged period of good economic results has recently been called into question by a deterioration in the external environment and a below-average harvest," specifies the institution's board of directors.
IMF Announces 4.5% Increase in GDP
The country has made enormous progress in reducing poverty, despite rising unemployment, according to the same source. Regarding the reform of the compensation system, the IMF calls on the Moroccan authorities to "move resolutely" on this project in order to promote medium-term fiscal adjustment and better target the most vulnerable social groups. In 2013, the IMF remains optimistic about economic growth in Morocco, even with the possible decline recorded in 2012 due to various external and internal shocks, says Mr. Masood Ahmed, director of the Middle East and Central Asia Department at the IMF. In this regard, a recovery of the economy was observed by the head of the IMF from the first month of 2013. The IMF forecasts progress of around 4.5%. These growth projections correspond to those announced by the central bank. For Bank AlMaghrib, GDP growth should be between 4% and 5% in 2013, assuming average cereal production and the persistence of unfavorable international economic prospects. The fund also expects a decrease in the budget deficit, in accordance with the medium-term reform agenda implemented by the government. It also noted that this agenda aims essentially to remedy certain "vulnerabilities", in particular the reduction of deficits, the improvement of economic productivity and more inclusive growth, welcoming the fact that one of the strengths of this economic program remains its "proven ability to attract foreign private financing." The director of the Middle East and Central Asia Department at the IMF recalled that the agreement concluded last August with Morocco on a precautionary and liquidity line (PLL) of nearly $6.3 billion was precisely in support of this economic program. Inflation, meanwhile, remained low despite the increase in several subsidized energy products in June 2012, as part of government efforts to contain the budgetary cost of subsidies. Despite relatively strong growth, unemployment has remained at around 9% since 2010. According to IMF estimates, real GDP should range from 4.5% to 5.8% between 2013 and 2018.
Appropriate Monetary Policy
The council also stressed "the importance of moving forward with the reform of the pension system to ensure its viability" and encouraged a "prudent approach to fiscal decentralization in order not to increase fiscal risks." Regarding the reform of the tax code, the fund welcomed the government's plan to reduce the ratio of the wage bill to GDP and to accelerate tax reform, believing that "clear communication and quality social dialogue will be crucial for the success of the implementation of the tax reform agenda." The IMF is of the opinion that the current monetary policy is appropriate. To this end, it encourages the authorities to soften the exchange rate to strengthen external competitiveness and shock absorption capacity, in coordination with other macroeconomic and structural policies. It also recommends redoubling efforts to promote higher and more inclusive growth, particularly by creating jobs for young people and reducing inequalities in income distribution and access to health care and education. In conclusion, the fund considers the financial sector "sound" overall. It congratulates the authorities for their efforts to further strengthen the regulation and supervision of the financial sector, particularly given the growing international exposure of Moroccan banks. In this regard, it suggests an update of the financial sector assessment program. It also encourages the authorities to strengthen legislation relating to money laundering and terrorist financing, as well as to intensify reforms aimed at promoting the expansion of financial circuits.
A Slight Acceleration of Global Growth in 2013
Global growth is expected to reach 3.5% in 2013, compared to 3.2% in 2012. The main sources of this economic recovery originate from emerging countries, developing countries and the United States. The IMF specifies that the risks of crisis are decreasing, but the risks of deterioration remain considerable.
Lesoir-echos.com
Published February 11, 2013.
Posted online February 11, 2013.
