IMF calls for austerity measures in Morocco as economic growth stalls

International lender reduced its economic growth forecast for Morocco to 3% from 3.2%

Woman walk in Chefchaouen, in the northern Moroccan Rif region on June 21, 2017. / AFP PHOTO / EMILY IRVING-SWIFT
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The International Monetary Fund urged Morocco to forge ahead with its efforts on fiscal consolidation while protecting the country's poorest as economic growth is expected to stay at 3 per cent in 2019.

The IMF urged the government to reduce inequalities, revamp labour market policies and implement education reforms to help create job opportunities, especially for women and youth, the lender said in a report on the completion of its 2019 mission to Morocco. Fiscal consolidation slowed in 2018 with the fiscal deficit stabilising at 3.7 per cent of the GDP.

Morocco struggled to revive economic growth after a slowdown in key industries such as agriculture. The North African country has two-year $3 billion (Dh11bn) Precautionary Liquidity Line arrangement with the IMF that will expire in December 2020. Economic expansion weakened in 2018, reaching 3 per cent, due to lower growth in the agricultural and tertiary sectors.

"Directors stressed the importance of sustaining the pace of structural reforms to move toward a more private-sector-led and inclusive growth model while reducing inequalities and protecting the most vulnerable," the IMF said.

The unemployment rate remains close to 10 per cent and is particularly high among youth, according to the fund.

Morocco's medium-term prospects are "favourable" with projections for 4.5 per cent economic growth by 2024, the IMF said.

However, the outlook is subject to "significant" domestic and external risks such as delays in implementing economic reforms, higher oil prices, geopolitical risks and lower growth in key partner countries.

On the upside, "lower international oil prices could help further strengthen the economy’s resilience and increased regional integration in the Maghreb region could become an added source of medium-term growth for Morocco," the IMF said.