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Morocco's Adoption of More Flexible Exchange Rate Regime, Historic and Successful Reform, IMF
19/03/2018
The International Monetary Fund (IMF) described, Thursday in Washington, the Moroccan decision to adopt a more flexible exchange rate regime as a historic and successful reform which will put the country on the track of an accelerated growth.

"The transition to a more flexible exchange rate regime, implemented last January, is a historic reform (...) and we continue to see it as a success," said Nicolas Blancher, Advisor and head of IMF Mission for Morocco, at a conference call with reporters on the third and final review under the Precautionary and Liquidity Line (PLL) with Morocco.

For Blancher, the introduction of greater flexibility in the exchange rate regime, supported by the IMF for a long time, will enable the Kingdom to improve the capacity of its economy to absorb exogenous shocks and preserve its external competitiveness in the future.

It is also an "important" and "essential" step that reflects the commitment of authorities to implement key reforms that will enable the country to be on an accelerated growth track, he added.

The dirham liberation process has just begun, said the IMF representative who noted that the dirham has remained very stable around its central parity and that the interventions were not particularly important. "This shows that the markets have confidence in the current situation (...) and that augurs well for the continuation of the reform".

Blancher also underlined the good performance of the Moroccan economy which has recovered its strength in 2017, adding that the medium-term outlook is favourable, with an expected growth of 4.5 pc by 2021.

In this regard, he welcomed the "sound" macroeconomic policies by the authorities and the implementation of key reforms that have contributed to further improving the resilience of the economy, notably efforts to pursue budget stabilization to reduce the public debt ratio in the GDP.

Blancher recommended the acceleration of reforms undertaken by the Moroccan authorities, notably in terms of job creation, promotion of education, amelioration of the business climate, particularly for small and medium-sized enterprises, and governance.

He also called for continuing the implementation of reforms on access to finance, the efficiency of public spending, and the strengthening of social security to achieve more inclusive growth.