Rabat – The International Monetary Fund (IMF) reaffirmed on Tuesday in Washington the “continued qualification” of Morocco to benefit from the Precautionary and Liquidity Line (PLL), worth USD 3.42 billion. The arrangement will expire on July 21, 2018.

The third agreement of its kind since 2012, the two-year PLL plan was approved by the IMF Executive Board in July 2016, and the first review of the arrangement was completed on May 15, 2017.

“On August 1, 2017, the Executive Board of the IMF completed the second review of the PLL and reaffirmed that Morocco continues to fulfill the conditions required to benefit from it,” said David Lipton, First Deputy Managing Director of the IMF, in a statement.

The PLL serves as an insurance policy providing available cash immediately for payments balance purposes. “The Moroccan authorities have not drawn on this agreement and they continue to treat it as a precautionary measure,” the statement said.

Morocco’s “sound” economic policies

For the IMF, “the good performance of Morocco’s economic fundamentals” as well as “the sound implementation of policies,” contributed to the “strong macroeconomic performance” of the Kingdom in recent years, explained Lipton, who is also acting chairman of the Monetary Institution’s Board of Directors.

Lipton lauded Morocco’s efforts in reducing external imbalances in 2017, maintaining international reserves, favorably developing the budgetary situation, reducing the deficit through solid revenue and expenditure control, rebounding growth, improving the external environment, and implementing the enacted reforms.

However, the director warned against some persisting dangers. “Domestic and foreign downside risks weigh heavily on these outlooks.” In this respect, Lipton added that the IMF agreement under the PLL “remains a useful insurance against exogenous risks and it accompanies the implementation of the economic policies of the authorities.”

Faced with these volatile risks, Lipton is not worried. “The authorities are determined to continue implementing sound policies,” he stressed. “The new government’s economic program is in line with the major reforms agreed under the PLL agreement, including those aimed at mitigating budgetary and external  vulnerabilities while consolidating the basis for stronger and more inclusive growth.”

Progress, but …

To maintain this positive progress, according to Lipton, it is necessary to “pursue fiscal consolidation by accelerating fiscal reforms, good public finance management at the local level in the context of budgetary decentralization, comprehensive public service reform, strengthening of the financial supervision of business enterprises, and greater efficiency of social programs and public investment projects.”

Lipton stressed the importance of adopting the Central Bank Act and pursuing the “implementation of the recommendations of the 2015 Financial Sector Assessment Program.”

Poking at the highly controversial dirham liberalization reform, Lipton stated that “the transition to a more flexible exchange rate regime based on a well-communicated strategy will help preserve external competitiveness and strengthen the economy’s ability to absorb shocks.”

According to him, Morocco must also “undertake other measures to improve the business climate, governance, competitiveness, access to finance and the labor market, and reduce regional disparities” to increase growth potential and make growth more inclusive.

By Chaima Lahsini

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