- Recent economic developments are encouraging and demonstrate the resilience of the Moroccan economy to shocks, however, as the country's economy continues to open up and undergoes a structural transformation, a flexible exchange rate regime would give macroeconomic management additional flexibility, International Monetary Fund (IMF), has said at the end of its mission in Rabat yesterday.
IMF mission was part of the consultation discussions to review recent economic developments in Morocco under the fund's agreements with the country's authority.
"Important progress has been realized in recent years in achieving macroeconomic stability, resistance of the economy to shocks, and strengthening of the public finance position. However, the spike in the world prices of petroleum and other commodities has significantly increased the cost of subsidies. The strong improvement in budget position in recent years allows, in short term, to absorb this increase in spending without compromising macroeconomic stability," observed the mission led by Mr Mark Lewis on 19-30 May.
IMF's mission further welcomed Morocco's medium-term objective in addressing macroeconomic stability by transforming current subsidies to target the poor of the country. IMF also warned that even with strong determination by the country to maintain price stability as well as keeping a low inflation against backdrop of global economic trends, monetary policies may be more difficult in the near future.
Morocco has an exchange rate regime, based on a peg of the dirham to a basket of euro and (US) dollar, a policy that has contributed to macroeconomic stability for the country.
Even though analytical work carried out by IMF mission suggests that level of exchange rate is in line with its economic fundamentals and further observing that country's financial sector is sound and resilient to shocks, there are also concerns on country's economic capacity and resilience.
"While the Moroccan financial sector has largely been untouched by turbulence in international financial markets, it is important that financial supervisory agencies pay close attention to capacity of the sector to operate in a more volatile international environment," the mission observed, adding that strong and sustained economic growth would entail continuation of reforms aimed at improving productivity of Moroccan economy.
"The continuation of sectoral reforms - notably in agriculture, energy, and internal trade - as well as education sector reform and strengthening of infrastructure and social services, will play an important role in raising investment, output, and employment, and improving incomes of the Moroccan population," concluded the IMF mission statement.
Morocco's successful integration into world economy is seen as a boost that would help external sector increase its contribution to growth through diversification of growth sources. Three aspects pointed out as of particular importance in this area are strengthening economy's ability to adapt to a changing global environment; pressing ahead with trade liberalization; and continuing the preparation for the transition to a more flexible exchange rate regime.
Morocco has recently adopted and published anti-money laundering legislation and is stepping up efforts to establish the financial intelligence unit in very near future.
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