IMF to Review Lower Morocco Credit Offer as Economy Improves

Updated on

The International Monetary Fund will review a $3.5 billion precautionary credit line for Morocco on Friday, an official at the global lender said, after lowering it from $5 billion due to an improvement in the kingdom’s economy.

“When you’re less vulnerable, you don’t need the same size of insurance policy,” Masood Ahmed, the IMF’s Middle East and Central Asia director, said in an interview. Ahmed said he expects the board of directors to consider the line, which the North African nation is likely to use only in an emergency.

Morocco has avoided much of the political unrest and militant activity that has spread in parts of the region since 2011, helping its economy outperform neighbors such as Egypt, Tunisia and Libya. It has taken steps to cut the budget deficit and control inflation, and is planning to introduce flexibility to its exchange rate regime.

The nation’s economy has been “systematically moving forward and making progress. It is a bit of a success story,” said Ahmed, who will retire from the fund after its meeting in October.

The Moroccan central bank raised its forecast for 2016 economic growth to 1.2 percent from 1 percent last month. It predicts output will expand 4 percent next year, thanks to an expected improvement in agriculture. The nation is also increasing the role of industry in its economy with companies such as Bombardier Inc., PSA Peugeot Citroen and Renault SA turning to the country as a regional base.

Central bank governor Abdellatif Jouahri said in June that Morocco would hold more talks with the IMF on a shift toward a flexible exchange rate.

(An earlier version of this story corrected actions expected this week by the IMF in the second paragraph.)

(Updates with talks on exchange rate in last paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE