Wednesday 02, August 2017 by Jessica Combes

IMF Executive Board concludes second review under the PLL Arrangement for Morocco


The Executive Board of the International Monetary Fund (IMF) completed the second review under the Precautionary and Liquidity Line (PLL) Arrangement and reaffirmed Morocco’s continued qualification on 1 August 2017.

The two-year PLL arrangement for Morocco in the amount of SDR 2.504 billion (about $3.42 billion) was approved by the IMF’s Executive Board in July 2016 and the first review of the arrangement was completed on 15 May 2017.

The Moroccan authorities have not drawn on the arrangement and continue to treat it as precautionary. The arrangement will expire on 21 July 2018.

“Morocco’s sound economic fundamentals and overall strong track record of policy implementation have contributed to a solid macroeconomic performance in recent years. External imbalances are projected to narrow in 2017 and international reserves to remain at a comfortable level. Fiscal developments are positive, with the budget deficit projected to narrow further in 2017 due to strong revenue performance and contained spending. Growth is expected to rebound in 2017 and accelerate gradually over the medium term, subject to improved external conditions and steadfast reform implementation. But this outlook remains subject to domestic and external downside risks. In this context, Morocco’s Precautionary and Liquidity Line (PLL) arrangement with the Fund continues to serve as useful insurance against external risks and supports the authorities’ economic policies,” said David Lipton, First Deputy Managing Director and Acting Chair of the IMF.

He added that the authorities are committed to sustaining sound policies and the new government’s economic programme is in line with key reforms agreed under the PLL arrangement, such as reducing fiscal and external vulnerabilities while strengthening the foundations for higher and more inclusive growth.

“Building on progress made in recent years, further fiscal consolidation is needed and should be based on accelerated tax reforms, sound public financial management at the local level as part of fiscal decentralisation, comprehensive civil service reform, enhanced financial oversight of state owned enterprises, and increased efficiency of social programmes and public investment projects,” added Lipton.

He added that adopting the central bank law and continuing to implement the 2015 Financial Sector Assessment Programme recommendations will help strengthen the financial sector policy framework. Moving toward a more flexible exchange rate regime, underpinned by a well communicated strategy, will help preserve external competitiveness and enhance the economy’s capacity to absorb shocks.

“Finally, raising potential growth and making growth more inclusive, by reducing persistently high unemployment levels, especially among the youth, and increasing female labour participation, will require further measures to improve the business climate, governance, competitiveness, access to finance, the labour market, and regional disparities,” Lipton concluded.


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