Moroccan Businesses Face Rising Loan Defaults Amid Economic Challenges

The sum of unpaid bills since the beginning of the year has reached 4.3 billion dirhams. An increase that raises doubts about the financial situation of companies in this new year. In order to better contain the impacts of the crisis, 50 billion dirhams have been mobilized through public support mechanisms, namely Damane Oxygène and Relance. At the end of November, bank loans to private non-financial companies increased by 4%, to 383 billion dirhams, reports L’Économiste.

"This increase covers an 8.3% increase in cash loans, the outstanding amount of which was set at 171 billion dirhams. The banks have granted a total of 18 billion dirhams in state-guaranteed cash loans in the second quarter," explains the newspaper. In addition, "a large part will be transformed into medium-term credit, as many companies find themselves unable to repay them by December 31 due to the ongoing health crisis."

Regarding the economic outlook, the future remains uncertain and blocks business leaders in their long-term prospects. Because "the outstanding amount of investment loans has decreased by 2.4% since the beginning of the year." However, if the deterioration in portfolio quality has been contained, this is mainly due to the government support measures, even though non-performing loans have climbed 10.7% over eleven months, to 44.3 billion dirhams.

The sharp increase in unpaid bills could worsen if activity fails to pick up, while bankers do not yet envisage a recovery before the second half of 2021. This situation could have major repercussions on the labor market where the unemployment rate has already reached 12.7%.