The Executive Board of the International Monetary Fund (IMF) approved a two-year agreement with Morocco to obtain a “flexible credit line” worth $5 billion.
The flexible credit line is equivalent to 51 billion Moroccan dirhams, Morocco has benefited from the Precautionary and Liquidity Line of $3 billion since 2012, which was renewed four times until it was used in 2020 to reduce the socio-economic impact of the COVID-19 pandemic and maintain an adequate level of official reserves to ease pressures on the balance of payments.
The IMF stated that the flexible credit line will help Morocco meet the challenges of rebuilding its movement space through policies and accelerating the implementation of its agenda on structural reforms in an environment characterized by increasing external risks.
The shift from previous agreements under the Precautionary and Liquidity Line to the flexible credit line was justified by Morocco’s strong economic fundamentals and institutional policy frameworks, its performance record of implementing strong policies, and its continued commitment to maintaining these policies in the future.
Antoinette Sayeh, Deputy Managing Director and Acting Chair of the IMF Executive Board praised Morocco’s very strong macroeconomic policies and institutional frameworks, which have allowed its economy to remain resilient in the face of multiple negative shocks over the past three years, including the pandemic, two droughts, and the repercussions of the Russian war in Ukraine.
The IMF expects Morocco’s economy to remain exposed to risks, such as a deterioration in the global economic and financial environment, increased volatility of commodity prices, and recurrent droughts.
The Moroccan authorities intend to treat the agreement under the flexible credit line as a precautionary tool and exit it when the twenty-four-month period expires, subject to the development of risks.
According to a statement made by an IMF official, the Moroccan authorities will maintain their commitment to fortifying policy margins in the upcoming phase, and aim to take a comprehensive approach to policies in response to any potential new shocks, and they will also continue implementing vital structural reforms to bolster economic growth and make it more inclusive and robust.
The agreement under the FCL will strengthen Morocco’s external buffers and provide the country with more guarantees against far-fetched risks.