Fitch Affirms Morocco’s BB+ Credit Rating, Cites Macroeconomic Stability

According to the agency, this rating is the result of macroeconomic stability reflected by relatively low inflation and GDP volatility, a moderate share of foreign currency debt in public debt as well as relatively comfortable external liquidity.

However, these advantages are balanced by weak development and governance indicators, high general government debt and larger fiscal and current account deficits than their peers.

Thus, the central government (CG) budget deficit is expected to narrow to 6.3% of GDP in 2021, compared to 7.7% in 2020 (excluding privatization proceeds), with the economic recovery leading to a solid rebound in revenues. Current expenditures remain high due to vaccination and other health care spending, as well as the start of the expansion of social services under new initiatives launched last year.

Furthermore, Fitch estimates that the budget deficit will depend on spending related to the new development model (NMD). "However, we think that new spending commitments will remain below the annual target of 4% of GDP by 2025, as the authorities will seek to continue reducing the deficit," the agency notes, estimating the cost of the NMD in 2022 at around 1.3% of GDP.