Moody’s Affirms Morocco’s Ba1 Rating, Cites Stable Economic Outlook

This confirmation of Morocco’s Ba1 ratings highlights the kingdom’s institutional strengths and solid external position, as well as the low income levels and socioeconomic challenges that limit the government’s fiscal consolidation strategy, Moody’s says. These challenges are slowing down debt reduction and the search for financing for the implementation of development projects. Despite the progress, Morocco is lagging behind on the path to development, compared to other countries with the same rating, the rating agency points out.

However, the outlook remains stable, Moody’s affirms, which encourages the Moroccan government to pursue economic and social reforms in order to build a solid, resilient economy to shocks, while ensuring the stability of debt. The agency also expects the Moroccan authorities to continue their fiscal consolidation efforts, despite the upcoming expenses related to the reform of the social security system and the implementation of many infrastructure projects linked to the 2030 World Cup, the 2025 Africa Cup of Nations, the post-earthquake reconstruction program, not to mention investments related to climate change.

The rating agency notes with satisfaction that the national ceilings are maintained, with the local currency at Baa1 (three notches above the sovereign rating) and the exchange rate at Baa2 (one notch below the local currency ceiling). Moody’s also commends Morocco for its resilience to major external shocks, highlighting the strength of the kingdom’s institutions and the good governance they demonstrate in crisis management. It also salutes the effectiveness of the kingdom’s monetary and macroeconomic policies, marked by maintaining price stability, reinforced by a gradual liberalization of the exchange rate.

As for Morocco’s public debt, it will remain stable at around 65% of GDP in the coming years, according to Moody’s, which forecasts a "modest" reduction in the budget deficit from 4.2% of GDP in 2024 to 3.8% in 2026. The agency also points to challenges that Morocco must meet to achieve sustainable growth. It draws attention to the persistent economic and social disparities in the kingdom that fuel inequalities, noting that women, youth and people living in rural areas have limited access to employment, education and health services.