IMF Urges Morocco to Expand Dirham Flexibility for Economic Resilience

To continue the reform of the exchange rate regime to help "the economy absorb potential external shocks and remain competitive". This is the additional effort that the IMF expects from Morocco, reports TelQuel.

Nevertheless, the Bretton Woods institution has encouraged Morocco to pursue, in a "carefully sequenced and well-explained manner", the process of widening the dirham’s fluctuation band to 2.5% around a pivot value, set by the euro and the dollar. This reform, the Kingdom had announced in January 2018.

Since March 2018, the central bank has been absent from the foreign exchange market and on the widening of the fluctuation band. "The transition to the second stage of the exchange rate regime reform will be done when there are signs that a shock could occur," Abdellatif Jouahri, Governor of Bank Al-Maghrib (BAM), explained last month. For him, this argument had a positive effect on the IMF, which ended up moderating its position towards its institution.

Furthermore, the Bretton Woods experts have encouraged the authorities to continue "fiscal consolidation to preserve debt sustainability, while safeguarding priority investments and medium-term social spending".

What about the main projects? According to the IMF, the Kingdom’s are the fight against corruption, the reduction of inequalities, the reform of education and the labor market in order to create jobs, especially for women and young people.