Morocco’s Central Bank Proposes Deficit Increase to Stimulate Economic Growth

Based on a CFG Bank study announcing a budget deficit of -7.5% at the end of 2020 (over 80 billion dirhams) against -3.5% in 2019, L’Économiste analyzes the need to strengthen the budget deficit in order to revive economic growth.

According to the daily, the measures recommended by Bank Al-Maghrib (BAM) as part of monetary policy (lowering the key rate to 1.5% and removing the mandatory monetary reserve) are part of this dynamic aimed at ultimately stimulating production and credit distribution, "strongly declining in recent years."

Regarding the evolution of credit to the non-financial sector, the forecasts are positive. According to the same source, a 1.9% increase in 2020 and 2.6% in 2021 is expected, taking into account the beneficial measures taken by BAM, which will "strengthen the ability of commercial banks to finance the economy on acceptable terms."

For the effectiveness of the two measures, L’Économiste proposes that they be "accompanied by recovery and support plans for certain sectors severely affected by the crisis in order to stimulate the creation of wealth."