(Ecofin Agency) - Despite an expected 3% growth for 2023, Morocco’s economy is still facing supply shocks that are causing inflation. On Monday, March 6, the IMF board met to discuss financial support for the Kingdom, which has consistently demonstrated strong economic fundamentals.
Morocco has applied for $3.7 billion in special drawing rights (SDRs) equivalent to $5 billion in financing from the International Monetary Fund (IMF), the institution announced Monday.
According to the Fund, the request was made under the flexible credit line (LCM), a tool designed to meet the financing demand of countries with a very strong policy and economic track record in preventing and resolving crises.
The request comes after an inflationary year in Morocco. As of December 2022, the country’s inflation was estimated at 8.3%. Despite the measures implemented by the government and the central bank, the price increase accelerated to reach 8.9% in January 2023, driven by a surge in food prices.
Although the country’s 2023 growth is expected to exceed 3%, it plans to continue the reforms announced last year, including the deployment of an allowance system targeting the most vulnerable. This strategy requires authorities to disburse significant financial resources while protecting vital economic sectors.
“Considering Morocco’s very strong policy frameworks and track record, IMF Managing Director Kristalina Georgieva intends to recommend approval of the FCL arrangement for Morocco when the IMF Executive Board meets again to take a decision in the following weeks. The IMF stands ready to continue to support Morocco in facing the risks from the highly uncertain global environment,” the IMF indicates in a press release.