The Executive Board of the International Monetary Fund (IMF) approved on Monday a two-year arrangement for Morocco under the Flexible Credit Line (FCL), designed for crisis prevention, of about $5 billion.
“Morocco is eligible for the LCM because of its very strong economic policies, institutional frameworks, and economic fundamentals, as well as its commitment to maintain these policies in the future,” the IMF said in a statement issued in Washington.
The agreement will strengthen Morocco’s external reserves and provide temporary insurance against plausible extreme risks on a temporary basis.
“Morocco’s strong macroeconomic policies and institutional framework have allowed its economy to remain resilient in the face of multiple adverse shocks over the past three years, including the pandemic, two droughts, and the fallout from Russia’s war in Ukraine,” said Antoinette Sayeh, IMF Deputy Managing Director and Acting Chair of the Board, in a statement following the Board’s deliberations.
She added that going forward, the Moroccan authorities “remain committed to rebuilding policy space, providing a comprehensive response to emerging shocks, and continuing to implement the broad structural reforms needed to make economic growth stronger, more resilient, and more inclusive.”
The IMF official noted that despite its resilience, Morocco’s economy “remains vulnerable to a deteriorating global economic and financial environment, increased commodity price volatility, and recurrent droughts. In this context, the LCM arrangement will strengthen Morocco’s external buffers and provide the country with additional insurance against extreme risks.
Since 2012, Morocco has benefited from four successive precautionary and liquidity line (PLL) agreements, each for about $3 billion.
The first LPL was approved on August 3, 2012, and three more were approved on July 28, 2014, July 22, 2016, and December 17, 2018. The fourth LPL expired on April 7, 2020, when the authorities purchased all available resources under the LPL to limit the social and economic impact of the COVID-19 pandemic and allow Morocco to maintain an adequate level of official reserves to mitigate balance of payments pressures.
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