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Morocco to repay part of $3 bln IMF loan as economy sees rebound 4.2% in 2021

By on December 23, 2020 0 123 Views

Morocco pledged to soon repay part of a $3 billion International Monetary Fund (IMF) credit facility, suggesting the kingdom’s economy may have seen off the worst effects of the pandemic and an acute drought.

But the IMF projected the North African kingdom economy to shrink “by 7.2 percent in 2020 and rebound next year to 4.5 percent, as the effects of the drought and pandemic wane and monetary and fiscal policy remain accommodative.”  

Post-program monitoring may not be necessary for the North African nation after it said it would “soon” repurchase an unspecified part of the credit line it drew on in April, the IMF said Wednesday in a statement following its latest Article IV consultation.

In a statement, the IMF said: “They welcomed today’s announcement that the authorities intend to repurchase soon part of the amount purchased under the PLL arrangement.

“This may make post-program monitoring no longer necessary. Directors looked f orward to continued close Fund engagement with the authorities.

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The government’s chief treasurer, Fouzia Zaaboul, didn’t immediately return calls seeking comment. Medias24, a Casablanca-based website, reported Morocco would repurchase $1 billion of the amount, citing what it described as an authorized source.

It points to a potential turnaround for Morocco, where major foreign-currency earners such as tourism and exports, including key market Europe, have taken a hit this year. The situation prompted authorities to raise record amounts of domestic and foreign debt, including a $3 billion Eurobond.

The IMF said a steady flow of remittances sent by Moroccan expatriates and lower imports helped maintain official reserves at “an adequate level.”

External debt as part of GDP is projected to remain around 39 percent over 2020-2025, versus 32.8 percent in 2019, the IMF said.

But the Washington-based lender also warned that “exceptional uncertainty” surrounds its outlook and authorities would need to continue supporting the economy until recovery is “well-entrenched,” and then resume fiscal consolidation.

Foreign-currency holdings were at $30.5 billion before Morocco’s record Eurobond sale this month, “so repaying the IMF won’t be a problem,” Mark Bohlund, a senior credit analyst at REDD Intelligence, said after the announcement.

Morocco may see its recovery initially driven by vehicle-manufacturing, phosphates and the financial industry before more labor-intensive industries like tourism and agriculture pick up, he said

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