IMF grants two-year $3.5bn credit line to Morocco

Christine Lagarde

THE International Monetary Fund (IMF) has granted Morocco a two-year $3.5 billion credit line for structural reforms to prompt more rapid and inclusive economic growth, Rabat’s finance ministry said on Saturday.

The Precautionary Liquidity Line (PLL) is meant for countries with relatively good economic policies that face balance of payments needs because of issues beyond their control. So far, only Morocco has used this type of program.

Reuters revealed that the line provides reassurance about Morocco’s economic policies to foreign lenders, investors and rating agencies, allowing it to tap international capital markets at favourable borrowing terms.

The IMF agreed on less than the $5 billion credit line signed in 2014 and the $6.2 billion deal signed in 2012 because the North African kingdom’s economy has been improving, thanks to government measures to tackle deficits.

The IMF expects Morocco to push ahead with structural reforms of its subsidies and pension and taxation systems. It calls on Moroccan authorities to start an inflation-targeting regime and greater exchange flexibility, the statement said.

Morocco has already done more than most North African countries to make painful changes required by international lenders to curb its deficit, such as ending fuel subsidies and freezing public sector hiring.

The government still controls the prices of wheat, sugar and cooking gas.

Earlier this week, the parliament gave final approval to a pensions reform bill, the latest major structural reform passed by the Islamist-led government.