S&P revises Morocco outlook to stable from negative
Standard & Poor (S&P)'s Ratings Services has revised its outlook on the Kingdom of Morocco to stable from negative, reflecting expectations that the government debt burden will stabilize. At the same time, S&P affirmed its BBB/A-3 local currency and BB/B foreign currency sovereign credit ratings on the Kingdom.
"The expected stabilization of the general government debt reflects improved control over public expenditures and tax collection," said S&P's credit analyst Luc Marchand. "The general government debt burden decreased to 78 percent of GDP in 2002, from 84.6 percent in 2001, and is projected to remain stable at this level over the next few years."
Central government expenditures decreased to 26.2 percent of GDP in 2002 and are expected to fall further to 25.5 percent in 2003, compared with 31.1 percent in 2001. This was primarily due to lower wage increases, lower subsidies, and lower capital expenditures. In light of these measures and higher economic growth, the central government deficit is expected to remain at about five percent of gross domestic product (GDP) in 2003.
The ratings on Morocco are supported by the relatively stable political environment, which is undergoing liberalization, prudent monetary policy, and a strong external official reserve position.
The government's policy of borrowing mainly in the domestic market while maintaining a strict monetary policy and encouraging continued high private transfers from nonresident Moroccans will limit the impact of fiscal deficits on the external sector.
Looking forward, despite the progress made, the country still faces the challenges of high unemployment, relatively poor social indicators, and a large public sector, which will continue to exert upward pressure on public expenditures and constrain private sector growth. Any significant departure from the government's strategy of curbing public expenditures, improving tax collection, accelerating privatization, and limiting the overall debt burden would result in downward rating pressure. — (menareport.com)
© 2003 Mena Report (www.menareport.com)