Mohamed Benchaâboun: The National Economy Will Suffer Three Major Shocks

This Thursday in Rabat, the Minister of Economy, Finance and Administration Reform, Mohammed Benchaaboun, stated that the national economy will be subject to three shocks. These are due to the strong worldwide economic deflation, the preventive measures against Covid-19 and the succession of two years of drought.

During the press briefing held after the Governing Council, the Minister Delegate in charge of Higher Education and Scientific Research, Driss Ouaouicha, said that Benchaâboun addressed the economic situation at the end of June and the prospects for the end of 2020. He also spoke about the main developments on the international and national scenes amidst the unprecedented crisis of Covid-19 and its repercussions on the Moroccan economy.

The Minister of Economy, Finance and Administrative Reform said the national economy is expected to suffer three shocks due to the strong deflation of the global economy, the health measures related to Covid-19 and the succession of two years of drought. He noted that the growth rate of the Moroccan economy will show a deflation of about 5%, for the first time since the end of the 1990s, while macroeconomic balances will be heavily impacted, particularly with regard to the budget deficit and the current account of the balance of payments.

In terms of foreign trade, Benchaâboun pointed out that the trade deficit had risen at the end of June. However, he noted that transfers from Moroccans residing abroad and income from tourism and foreign investment had fallen sharply. Nevertheless, he explained that foreign exchange reserves had improved as a result of the mobilization of foreign financing, at a time when the foreign exchange market had become stable without any intervention by Bank Al Maghrib.

On the same subject, Mohamed Benchaâboun predicted that the current account deficit of the balance of payments will have reached 8% of GDP by the end of 2020. As for public finances, the minister informed that the implementation of the finance law at the end of June 2020 shows a clear decline in tax resources compared to preliminary estimates, while spending is at the same level as the estimates, thanks to the measures taken to support the national economy.

He noted that, as a result of these developments, the budget deficit would stand at 7.5% and the debt ratio at 75.5% of GDP.

However, the Minister cautioned that all these estimates remain subject to the risks associated with the evolution of the Coronavirus epidemic in the coming months.

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