Morocco needs to accelerate economic growth to reduce poverty and unemployment, the International Monetary Fund (IMF) said in its annual review of the Moroccan economy. "To achieve this objective," said the report issued Thursday, August 2, IMF directors "considered that macroeconomic policies will need to be tightened and structural reforms accelerated."
The IMF, however, commended Morocco "for achieving macroeconomic stability, as evidenced by the comfortable external position and the maintenance of inflation at industrial countries' level, despite adverse weather conditions and terms of trade developments."
The privatization of Maroc Telecom for $2.1 billion (six percent of GDP) during the first quarter of 2001 did a lot to brighten economic prospects, the IMF said. "This privatization process was open and transparent, and the price obtained substantially exceeded expectations, considering the downturn in the world telecommunication market," it stressed.
"Better rainfall ... should lead to a 25 percent increase in agricultural output in 2001 with favorable spillovers on other sectors," the IMF added. "Real GDP growth is projected at six percent in 2001. Nonagricultural output is expected to increase by 3.8 percent driven by construction activity, telecommunications, and tourism," it added.
Inflation should increase slightly to 3.0 percent in 2001, up from 1.9 percent in 2000 largely on account of the April devaluation of the dirham and the fiscal deficit is now projected to reach 7.2 percent of GDP, up from 6.5 percent last year, the report said.
The IMF report warned against Morocco's increasing budget deficit excluding revenue from privatization. It agreed "that the fiscal stance could be placed on an unsustainable path unless measures are taken to bring the fiscal position more in line with the authorities' medium-term objectives."
The report welcomed Morocco's determination to set the overall deficit target for 2002 at 3.0 percent of GDP, including privatization proceeds and stressed "the importance of strict adherence to this target and of further deficit reductions over the medium term."
Some directors also "encouraged the authorities to envisage broadening the coverage of the value-added tax in order to offset future declines in custom revenues." They also stressed that the Central Bank of Morocco "should be ready to tighten monetary policy in response to any sign of inflationary pressures."
"They urged the authorities to address promptly the non-performing loans of two public banks and ensure their full capitalization," the IMF report said. ― (AFP, Washington)
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)
