The International Monetary Fund’s (IMF) Executive Board has approved a two-year Flexible Credit Line (FCL) arrangement for Morocco. The arrangement is equivalent to US$ 5.0 billion (about 51 billion MAD).
Since 2012, Morocco has had four successive Precautionary and Liquidity Line (PLL) arrangements, each totaling around US$ 3 billion. The first PLL was approved on August 3, 2012, and the last on December 17, 2018. The fourth PLL expired on April 7, 2020, when the authorities purchased all available resources under the PLL to limit the social and economic impact of the COVID-19 pandemic and allow Morocco to maintain adequate official reserves to mitigate balance of payments pressures.
Despite Morocco’s successful past experience with PLL arrangements, the country’s strong fundamentals, institutional policy frameworks, sustained track record of implementing sound policies, and continued commitment to maintaining such policies in the future, all justify the transition to an FCL arrangement. The FCL arrangement will help Morocco face the challenge of rebuilding policy space while accelerating the implementation of its structural reform agenda in an increasingly risky external environment.
After discussing Morocco, the Deputy Managing Director and Acting Chair of the Executive Board, Ms. Antoinette Sayeh, issued a statement acknowledging the country’s resilience in the face of multiple negative shocks over the past three years. Despite this, Morocco remains vulnerable to a worsening of the global economic and financial environment, higher commodity price volatility, and recurrent droughts.
The FCL arrangement will enhance Morocco’s external buffers and provide the country with additional insurance against tail risks. The authorities intend to treat the FCL arrangement as a precautionary measure and exit the arrangement after the 24-month period, contingent on the evolution of risks.