Fitch Ratings, the global credit rating agency, has reaffirmed Morocco’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at BB+ with a “Stable Outlook.” This decision is rooted in Morocco’s history of sound macroeconomic policies, bolstered by solid official creditor support, a favorable debt structure, and robust liquidity reserves.
Nevertheless, several challenges temper these ratings. Lower development and governance indicators, a high budget deficit, and susceptibility to adverse weather conditions are key concerns.
Despite these challenges, Fitch Ratings anticipates that the economic impact of the recent earthquake resulting in extensive damage to housing and infrastructure should be limited. The earthquake’s economic impact, though tragic, is projected to have limited ramifications on Morocco’s economy for the year, as the affected areas do not play a pivotal role in vital industrial activities. Nevertheless, there may be disruptions in the country’s tourism sector.
The Moroccan fiscal landscape is another aspect under scrutiny. Fitch forecasts a government deficit of 5% of GDP in 2023, a slight decrease from the 5.2% recorded in 2022.
According to this reputable firm, Morocco’s debt is on the rise, projected to reach 74.1% of GDP by 2025.
Government spending has experienced upward pressures, rising by 7.2% year-on-year. The reasons for this spending surge include primarily the drought’s impact on food supply and high inflation. Although gas subsidies were lower than budgeted, subsidies for food and farmers increased, and investments in water infrastructure accelerated.
On the economic front, Morocco aims to achieve a 2.7% GDP growth rate in 2023, with potential accelerations in 2024 and 2025 driven by infrastructure investments and a domestic consumption revival. Despite these projections, Morocco’s economic growth remains vulnerable to rainfall deficits and international economic developments.
Morocco has experienced notable inflation fluctuations. The inflation rate reached its peak at 10.1% in February but receded to 5.0% in August. Fitch Ratings foresees inflation averaging 5.8% in 2023, with an expected decline to 2.4% by 2025.
Despite the economic challenges and the earthquake, Morocco’s foreign-exchange reserves have improved in 2023, reaching 35.3 billion USD as of last month.