IMF highlights Morocco's 'positive economic' performance in 2008

The International Monetary Fund (IMF) said Morocco made a positive economic performance in 2008 despite the current global economic and financial climate.

    In a report published on Tuesday, the IMF stressed that with a more diversified economy, stronger public finances, and a sound financial sector, the North African country is well poised to continue its progress.

    Noting that Morocco has made major progress in recent years to increase economic growth and strengthen the economy's resilience to shocks, the report underlined that the gains reflect sound macro-economic policies, sustained structural reforms, and good opportunities provided by globalization.

    The report pointed out that the Moroccan authorities, which intend to raise the capital adequacy ratio to 12% by end-2009, should continue their close surveillance of rapid credit growth, notably concerning the real estate sector.

    The exchange rate peg, according to the IMF, has served as an anchor of macro-economic stability, and its level appears broadly in line with fundamentals.

    Morocco's external position is sound and "exports have performed well, although imports have been rising even faster," said the report.

    "Robust tourism receipts and remittance flows have mostly offset the negative trade balance, and with strong capital flows, external reserves rose from $22 billion at end-2006 to $26.5 billion at end-May 2008, equivalent to 6.4 months of 2009 imports of goods," it added.

    The report also noted that robust revenues are largely accountable for stronger public finances in 2007 as the overall fiscal deficit improved from 2% of GDP in 2006 to close to balance in 2007.

    Total government debt was 54 % of GDP at the end of 2007, down from 58% in 2006. Tax revenue has continued to surge during the first quarter of 2008 but the cost of subsidies is expected to rise significantly in 2008, the report explained.

MAP