Morocco’s Economy Contracts 6.3% in 2020 Amid COVID-19 Crisis, Central Bank Reports

In addition to the health crisis related to Covid-19, the weather conditions were less favorable to the Moroccan economy in 2020, resulting in a contraction of 6.3% and a loss of 432,000 jobs, Jouahri said during his presentation, specifying that with the decline in tax revenues and the investment effort made by the Treasury, the budget deficit reached 7.6% of GDP and public debt increased to 76.4% of GDP. As for the current account deficit, it reached 1.5% of GDP due to the decline in foreign trade. At the same time, Bank Al-Maghrib’s official reserve assets improved and inflation remained stable at 0.7%.

To alleviate the impact of the crisis, Bank Al-Maghrib has lowered its key rate twice in a row, bringing it to 1.5% and fully releasing the compulsory reserve account, the governor added, noting that bank refinancing operations have tripled and Bank Al-Maghrib has set up new refinancing lines for participatory banks and microcredit associations and has increased its program dedicated to SMEs. These measures have made it possible to ensure appropriate financing of the economy, with mainly a fall in interest rates and a sustained growth rate of bank credit. With the evolution of the vaccination campaign, Morocco is gradually getting through this crisis.

In addition, several ongoing projects, some of which have been launched on royal instructions, have helped accelerate the growth of the economy in order to achieve the objectives set within the deadlines. However, it will be necessary to fight against unfair competition, tax evasion and unprofitable public subsidies and others to facilitate economic growth. These objectives require the contribution of stakeholders. Thus, this pandemic could become an opportunity for Morocco, if these ongoing projects are completed, Jouahri stressed.