IMF Executive Board approves two-year US$5.0 bn flexible credit line arrangement for Morocco

International Monetary Fund (IMF)

The Executive Board of the International Monetary Fund (IMF) has approved a two-year arrangement for Morocco under the Flexible Credit Line (FCL). The approved amount is equivalent to SDR 3.7262 billion (about US$ 5.0 billion, representing 417 percent of quota).

Morocco has benefited from four Precautionary and Liquidity Line (PLL) arrangements since 2012, each totaling about US$ 3 billion. The first PLL was approved on August 3, 2012, followed by three additional approvals on July 28, 2014, July 22, 2016, and December 17, 2018. The fourth PLL expired on April 7, 2020, when the authorities used all available resources to mitigate the social and economic impact of the COVID-19 pandemic and maintain an adequate level of official reserves to alleviate pressures on the balance of payments.

Although the PLL arrangements have been successful in the past, Morocco's very strong fundamentals, institutional policy frameworks, sustained record of implementing strong policies, and commitment to maintaining such policies in the future justify the transition to an FCL arrangement. An FCL arrangement will help Morocco rebuild its policy space while accelerating the implementation of its structural reform agenda in an increasingly risky external environment.

Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chair, issued a statement following the Executive Board's discussion on Morocco, noting that the country's economy has demonstrated resilience in withstanding several negative shocks over the past three years, including two droughts, the pandemic, and the repercussions of Russia's war in Ukraine. She attributed this resilience to Morocco's strong macroeconomic policies and institutional framework and added that the Moroccan authorities remain committed to implementing the necessary structural reforms to achieve more robust, resilient, and inclusive economic growth. Additionally, they plan to restore policy margins and provide a comprehensive response to new shocks.

However, despite the country's resilience, it remains vulnerable to global economic and financial instability, commodity price volatility, and recurrent droughts. In this context, the FCL agreement will assist in increasing Morocco's external buffers and provide additional protection against potential risks.

Ms. Sayeh concluded by stating that the authorities intend to use the FCL arrangement as a precautionary measure and plan to exit the agreement once the 24-month period is completed, depending on the evolving risks.