IMF Approves $496 Million Funding for Morocco’s Economic Resilience

The IMF has approved $496 million in funding for Morocco, marking total disbursements under its Resilience and Sustainability arrangement at approximately $1.24 billion. This funding aims to support Morocco’s transition to a green economy and enhance resilience against natural disasters, following a devastating earthquake. Despite challenges such as high unemployment, the economy is projected to grow modestly, supported by ongoing structural reforms.

On Tuesday, the International Monetary Fund (IMF) executive board approved the release of $496 million in funding for Morocco, illustrating confidence in the nation’s economic resilience. IMF Deputy Managing Director Kenji Okamura remarked on the progress, stating that Morocco’s recovery amid negative shocks reflects robust economic policies. This funding is part of Morocco’s Resilience and Sustainability (RSF) arrangement, which has resulted in total disbursements of approximately $1.24 billion since its inception.

This RSF arrangement, approved in September 2023, aims to facilitate Morocco’s transition towards a green economy and bolster its resilience against natural disasters, especially following the recent 6.8-magnitude earthquake that resulted in nearly 3,000 fatalities. The economy is anticipated to grow modestly at 3.2 percent in 2024 and is projected to reach about 3.7 percent in the coming years, supported by structural reforms and ongoing infrastructure projects.

Okamura emphasized the necessity of these reforms, stating, “These reforms are essential to making growth stronger, more resilient, job-rich, and more inclusive.” Nonetheless, high unemployment, particularly in the agricultural sector, continues to pose challenges, with rates approximately at 13 percent. However, the decline in inflation has enabled the central bank to reduce interest rates, with the latest cut bringing rates to 2.25 percent.

An IMF mission to Rabat last month highlighted the importance of structural reforms aimed at enhancing job growth and noted that strong domestic demand was aiding economic expansion. The mission applauded reforms in Morocco’s tax system and recognized progress in the Mohammed VI Investment Fund, which is designed to improve access to equity financing for small and medium-sized enterprises.

The completion of the third review marks the conclusion of Morocco’s RSF programme, with six out of seven scheduled measures successfully implemented. Okamura stated that these measures are crucial for better management of water resources, enhancing the electricity sector’s liberalization, and addressing climate risks associated with fiscal stability and the financial system. A proposed carbon tax remains under assessment due to the need for further analysis of its implications.

In summary, the IMF’s approval of $496 million for Morocco underscores the country’s economic resilience, particularly in the face of recent natural disasters. The RSF programme aims to further support Morocco’s shift towards a green economy while facilitating structural reforms necessary for sustainable growth. The positive outlook on GDP growth amid high unemployment illustrates a complex yet hopeful economic landscape, calling for continued focus on reforms and fiscal stability.

Original Source: www.thenationalnews.com