The IMF has released $496 million in funding for Morocco, emphasizing the country’s economic resilience amidst challenges. The funding follows the successful completion of the third review of the Resilience and Sustainability Framework, aimed at supporting Morocco’s transition to a green economy. Despite challenges like high unemployment, growth is projected to continue due to structural reforms and infrastructure initiatives.
On Tuesday, the International Monetary Fund (IMF) executive board authorized the release of $496 million in funding for Morocco. This decision underscores Morocco’s economic resilience, attributed to its robust policies, as highlighted by Kenji Okamura, the IMF’s deputy managing director. The fund’s approval follows the successful completion of the third review under the Resilience and Sustainability Framework (RSF), raising total disbursements to approximately $1.24 billion.
The RSF arrangement, approved in September 2023, aims to facilitate Morocco’s transition to a green economy while enhancing its capacity to withstand natural disasters. This action came shortly following a catastrophic 6.8-magnitude earthquake that claimed nearly 3,000 lives, marking it as the deadliest earthquake in over sixty years. The earthquake occurred just prior to the 2023 IMF and World Bank Annual Meetings in Marrakech.
The IMF indicated that Morocco’s economic growth is projected to moderately slow to 3.2 percent in 2024 due to continuing drought conditions. Nevertheless, the gross domestic product is anticipated to rise to about 3.7 percent in the coming years, bolstered by structural reforms and significant infrastructure projects. Mr. Okamura emphasized the necessity of these reforms to foster stronger, more resilient, and inclusive growth.
Despite these positive indicators, unemployment remains a pressing issue at approximately 13 percent, a situation exacerbated by setbacks in the agricultural sector. Conversely, a decline in inflation has enabled the central bank to implement interest rate cuts, lowering the rate from 2.5 percent to 2.25 percent, with an expectation of inflation dropping to about 2 percent over the next two years.
During a recent mission to Rabat, IMF staff emphasized the importance of structural reforms aimed at bolstering job growth, citing strong domestic demand as a catalyst for economic expansion. They commended initiatives to reform Morocco’s tax system and assess climate change risks as part of the country’s medium-term fiscal strategy. Progress was also noted regarding the Mohammed VI Investment Fund, which aims to facilitate equity financing for small and medium-sized enterprises.
The third review concluded the RSF program, with most measures implemented successfully. Mr. Okamura stated that these measures would enhance water resource management, liberalize the electricity sector, and address climate risks impacting fiscal and financial stability. However, the gradual introduction of a carbon tax remains pending further impact analysis by Moroccan authorities.
In summary, the IMF’s recent funding release for Morocco signifies a commitment to the country’s economic resilience and sustainability efforts. With projected growth amid challenges, structural reforms, and infrastructure developments, Morocco is poised for a more robust economic future. However, ongoing concerns regarding unemployment and the implementation of a carbon tax illustrate the complexities faced by the nation as it seeks to transition towards a green economy.
Original Source: www.thenationalnews.com
