Morocco’s Central Bank Chief Outlines Economic Impact and Response to COVID-19 Crisis

Addressing the issue of the insufficiency of the measures taken by the economic monitoring committee and the recommendations to the Executive in terms of support measures for the economy and employment in the COVID-19 crisis, Abdellatif Jouarhi believes that the Moroccan authorities have shown reactivity and proactivity.

Measures were taken as soon as the first cases appeared; which has probably helped to avoid the worst. The decision to create the special fund by King Mohammed VI dedicated to COVID-19 is salutary, judicious and has come at the right time. This fund has facilitated the mobilization of significant resources to block the way for the virus, acknowledged the official who did not overlook the spontaneous solidarity of companies, public and private institutions and Moroccans as a whole. This is the expression of the strength of a nation in times of crisis. The actions to be taken, their prioritization and their implementation methods will be financed by the resources of this fund under the supervision of the monitoring committee which is composed of representatives of all the parties concerned, specified the Wali of Bank Al-Maghrib.

He insists that the health and care of the most vulnerable households affected by the closure of certain activities and travel restrictions are prioritized in the actions to be taken. In addition, there are the SMEs which are the most fragile segments of the economy.

Regarding the resilience of the Moroccan economy to achieve a growth of 2.3% in a COVID-19 context, Jouarhi responds that the preparation of the bank’s forecasts, the assumptions used are largely optimistic. Because, based on the rapid and significant developments that have occurred since the data stopped. An exceptional meeting could take place if the developments of the situation require it; which is why the situation must be closely monitored. All countries are affected by this unprecedented economic and social crisis, regardless of their level of development.

On the question of prudential rules to allow banks to better support the economy, Abdellatif Jouahri believes that the current provisions allow banks to grant a moratorium without requiring the downgrading of the debts concerned. Bank Al-Maghrib will show the greatest flexibility required by the situation.

As for the heavy impact on foreign exchange reserves and the value of the dirham, he recalls that foreign exchange reserves are at an adequate level and this level allows to cover the equivalent of more than 5 months of goods and services imports. The evolution of the COVID-19 epidemic is such that it creates an uncertainty in which it is difficult to foresee the evolution of the situation in the coming weeks. Provisions are being considered to strengthen foreign exchange reserves in all cases. The dirham will be limited to the extremities of the fluctuation band of +/−5% around a central rate set from the dirham quotation basket. This will contribute to the development of the Moroccan foreign exchange market and strengthen the resilience of the economy and its ability to absorb external shocks related to the COVID-19 crisis.

To avoid a systemic crisis, the provisions to be adopted are coordinated by the national regulatory authorities within the framework of the systemic risk monitoring committee, he said.