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Four Loans in Ten Years: The IMF Flies to the Aid of Morocco

For the fourth time in ten years, the International Monetary Fund (IMF) is flying to the aid of Morocco by granting it a line of credit worth several billion dollars.

Already considered one of the most indebted countries in Africa, the kingdom continues to increase its debt, the outstanding amount of which was already estimated in 2022 at 65 billion dollars by the World Bank.

A financing agreement with Morocco, worth $5 billion and last two years, was approved on Monday (April 3rd) by the IMF’s board of directors, the Bretton Woods institution announced in a statement released on Tuesday, April 4.

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The deal was reviewed on Feb. 6 and the fund’s chief executive, Kristalina Georgieva, warned she would recommend approval.

Morocco had just left the list of countries subject to surveillance by the Financial Action Task Force (FATF), an organization responsible for tracking down money laundering, without which the release of the IMF credit line would not have been possible.

The line of credit requested and obtained by Morocco is intended to ” strengthen the external reserves ” of the country and to protect it from “plausible extreme risks on a temporary basis “, it is indicated in the IMF press release.

The IMF board explained that its decision is motivated by Morocco’s policies, institutional political frameworks and ” solid economic fundamentals “.

IMF โ€“ Morocco: 4 lines of credit since 2012

Nevertheless, he stressed that the Moroccan economy remains exposed to the vagaries of the global economic and financial environment, the volatility of commodity prices and recurrent droughts.

The kingdom is experiencing an acute economic and financial crisis, marked by very high inflation and the rise of social protest, particularly through street demonstrations. The rise in the prices of basic food products and fuels in particular has aggravated the precariousness of large sections of the Moroccan population.

This, in an equally uncertain political context with the illness of King Mohammed VI, whose public appearances have been very rare for a few months.

The IMF has already granted since 2012 three lines of credit to Morocco worth 3 billion dollars each. The recourse to this fourth line of credit confirms the current difficulties of the Moroccan economy which registers each year abyssal deficits of the balance of trade and the budget.

The trade balance deficit stood at $31 billion in 2021. It is mainly to fill these deficits that the Moroccan state is getting into more and more debt.

If the successive loans relieve the Moroccan government, economists are worried about their cost and their social consequences.

During the announcement of the examination of the agreement by the board of directors of the IMF last February, the Moroccan economist Najib Akesbi expressed concern, in statements to AFP, of the opacity which surrounds credit in terms of cost and access conditions.

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