Moroccan Officials Reject IMF’s Economic Recovery Plan Amid Pandemic

To revive economic growth in Morocco, the International Monetary Fund (IMF) has issued several recommendations and recently called for job cuts, immediate privatizations to the detriment of investments and public and private consumption, thus provoking protests in the ranks of senior Moroccan officials. But its instructions are no longer appropriate, particularly due to the impacts of the health crisis, said the High Commissioner for Planning, Ahmed Lahlimi, adding that losses and inflation may rise with a sovereign decision and that the loan can be allocated to investments in productive sectors.

For a public finance expert, the International Monetary Fund is calling for a reduction in public spending to lower the budget deficit, control the wage bill and reduce the number of jobs or outright privatization. The governor of the Moroccan central bank, Abdellatif Jouahri, believes that a new Precautionary and Liquidity Line (PLL) from the IMF would only be requested if Morocco does not undertake the necessary reforms. But it would be impossible to ask the International Monetary Fund for a PLL, "a kind of insurance in case macroeconomic conditions deteriorate," following the implementation of several reforms that he intends to commit to, while setting priorities on this subject.

However, the kingdom must avoid the trap of excessive borrowing and work for tax reform, say some analysts. In addition, the central bank governor said that the most important thing are the structural reforms that will be taken. He outlined the major projects to be launched on Tuesday. These include pension funds, labor market flexibility, the issue of human resources, the reform of public institutions and companies, and direct aid to vulnerable households.