Good news for Morocco. The US rating agency Moody’s Investors Service (“Moody’s”) changed the outlook of the government of Morocco from “negative” to “stable” and affirmed its long-term issuer ratings at Ba1.
In its analysis, the agency explains that the change in outlook to stable reflects the recovery of real GDP to pre-pandemic levels and the government’s crisis management capacity demonstrated during the pandemic.
“The improved governance results give Moody’s confidence that the government will be able to implement gradual fiscal consolidation that will stabilize the debt ratio and fiscal accounts,” the agency said. This situation would also help maintain social stability in the face of Morocco’s exposure to the food and energy price shock triggered by the war in Ukraine.
Regarding the confirmation of the Ba1 rating, Moody’s justifies it by Morocco’s economic resilience and the constitution of significant foreign exchange reserves covering more than six months of imports at the end of 2021. This situation allows the Kingdom to cope with the impacts of soaring commodity prices worldwide. The ceilings per country of Morocco remain unchanged. The local currency ceiling remains at Baa1, three notches above the sovereign rating, reflecting predictable institutions and low external vulnerability risk, balanced by a large public sector footprint. The foreign currency ceiling at Baa2, one notch below the local currency ceiling, reflects relatively modest transfer and convertibility risks despite the existence of capital controls,
