The Executive Board of the International Monetary Fund (IMF) recently concluded the Article IV consultation with Morocco. According to the report, Morocco’s economic conditions improved in 2002 despite a less favorable international environment, which was marked by a decline in tourism and external demand. Real gross domestic product (GDP) growth reached 4.5 percent reflecting a further rise in agricultural output and somewhat higher growth in the nonagricultural sectors.
The nations external position strengthened further with an increase in foreign exchange reserves to the equivalent of 9.4 months of imports, external debt indicators improved markedly while inflation remained subdued.
According the IMF staff team commissioned with carrying out the consultation, Morocco has achieved macroeconomic stability over the last decade with the nation’s fixed exchange rate providing an anchor for the economy, a prudent monetary policy, and an adequate fiscal policy.
Since 1999, however, fiscal policy has been expansionary and the authorities have used part of the privatization receipts to finance increased expenditure. Nevertheless, inflation has remained at levels consistent with that of partner countries, the current account has turned into a surplus, while foreign exchange reserves reached eight months of imports at end 2001, stated the report.
Morocco's growth performance over the last decade has not been strong enough to reduce poverty. Growth has also been volatile because of the impact of recurrent drought conditions on agricultural output. While non-agricultural growth has been relatively steady in recent years and has shown signs of revival, structural rigidities have constrained potential growth. Thus, unemployment has remained high and social indicators still indicate needs for significant improvement.
Morocco’s fiscal deficit dropped significantly to 4.5 percent of GDP from 5.8 percent of GDP in 2001 and against a budget target of 6.8 percent of GDP. The Government debt-to-GDP ratio continued to decline.
Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies.
On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors and is transmitted to the country's authorities. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
