Morocco’s Economy Faces Triple Threat Amid Global COVID-19 Crisis

Following the government council held on Thursday, July 23 in Rabat, Driss Ouaouicha, the delegate minister in charge of Higher Education and Scientific Research, in a press briefing, stressed that Benchaâboun’s analyzes were based on the main developments on the international and national scenes against the backdrop of the unprecedented crisis related to Covid-19 and its repercussions on the Moroccan economy. Indeed, like the world economies, the economy of the kingdom must expect to be tested. Thus, it will essentially face three shocks that relate to the strong deflation of the world economy, the health measures related to Covid-19 and the succession of two years of drought.

Addressing other equally important details, the Minister of Economy mentioned the growth rate of the Moroccan economy, which will show a decline of 5%, for the first time since the late 1990s. Meanwhile, he notes, "macroeconomic balances will be strongly impacted, particularly with regard to the budget deficit and the current account deficit of the balance of payments." Furthermore, while the trade deficit has improved at the end of June, Benchaâboun nevertheless stressed that remittances from Moroccans residing abroad and revenues from tourism and foreign investment have shown a sharp decline. However, the good news comes from foreign exchange reserves which, he assures, "have improved thanks to the mobilization of foreign financing, at a time when the foreign exchange market has stabilized without any intervention by Bank Al Maghrib."

As for the current account deficit of the balance of payments at the end of 2020, the minister predicted that it would reach 8% of GDP. He will point out that the implementation of the finance law will show a clear drop in tax revenues compared to the preliminary estimates, while expenditures are at the same level as the estimates, thanks to the measures taken to support the national economy.

All these realities lead Mr. Benchaâboun to say that the budget deficit would be 7.5% and the debt ratio 75.5% of GDP. However, he argues, the evolution of the coronavirus pandemic in the coming months will greatly influence all these estimates.