Neither war, drought nor inflation will affect Morocco's economic growth in 2023, which the IMF estimates at 3%

El FMI resalta los éxitos económicos de Marruecos

AFP/FADEL SENNA - Moroccan bank Attijariwafa's headquarters in Casablanca

Morocco's GDP growth "should accelerate to 3% in 2023, mainly due to the recovery of agricultural production and its positive impact on other sectors of the economy". The International Monetary Fund (IMF) commended Morocco for its "very strong policy response" to mitigate the social and economic consequences of recent negative impacts related to the drought and war in Ukraine. The IMF also commended Morocco's central bank for its recent decision to move to a tighter monetary policy regime to curb inflation. In 2021, Morocco's central bank raised interest rates twice, from 1.5% to 2.5%.

In the same assessment, the IMF praised the Moroccan government's budget for 2023 and indicated that it "strikes a balance" between reducing the national budget deficit, mitigating the social and economic impact of mutual shocks, and financing structural reforms. The assessment also emphasises the country's progress in implementing a number of social reforms. In particular, the IMF commended Morocco for its strong commitment to "comprehensive structural reforms". "Reforms to social protection, health and education systems will improve equality and the quality of opportunities, spend more purposefully, and preserve human capital over the long term," as mentioned in the report.


In addition, inflation is expected to gradually decline to around 4% in 2023 as the commodity price shock fades and monetary policy becomes less accommodative. As determined by the IMF, the current account deficit is estimated to decline to its normative value of about 3% of GDP in the medium term due to the momentum created by the implementation of structural reforms. The same source said that the baseline forecast was subject to "extraordinarily high uncertainty", mainly due to declining global conditions and the additional major impact of Russia's war in Ukraine.

Commending the Moroccan authorities for the "very strong policy response" that has mitigated the social and economic consequences of recent negative shocks, the IMF managing director noted that while risks to the economic outlook are low, "strong policies and rapid implementation of reforms are needed to support stronger economic activity". The Fund has stopped quoting and is in deficit for the 2022 trade deficit. Citing the 2023 Finance Bill, they noted that the budget strikes a balance between deficit reduction and mitigating social and economic damage. 


As far as the IMF is concerned, there is still time for optimism about the restoration of domestic normality and stabilisation or even improvement in external economic conditions. The IMF also praised the government's comprehensive structural reform programme and predicted that the recovery in economic activity would continue this year. Inflation in 2022 should moderate this year as the impact of commodity prices fades. Indeed, Bank Al-Maghrib (BAM) raised its benchmark interest rate by 50 basis points to 2% in September, citing the risk of an automatic inflationary spiral due to persistently high inflation.

Last October the Financial Action Task Force (FATF) decided to keep the North African country on the 'grey list' to address strategic gaps in Morocco's anti-money laundering regime. While the IMF praised Morocco's progress in improving its financial framework, an FATF expert report suspended lending to the fund after an on-site visit. To this end, the IMF relies on a statement by the National Financial Intelligence Agency (ANRF) that it is satisfied that the on-site visit is in line with FATF-approved supervisory procedures and reflects assurance that Morocco has complied with all the axes contained in the FATF-related Action Plan.


However, the IMF in its report acknowledged the authorities' efforts and also welcomed several reforms currently underway by the executive related to social protection, health and education. "They will improve equity and quality of access, target spending, support long-term human capital, and reduce dependence on fossil fuels. They will reduce water scarcity and reduce gender inequality," the financial institution said, adding that "SOE reforms and other initiatives to increase private investment will foster private sector growth". 

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