Morocco Loses Investment Grade as Fitch Downgrades Rating Amid Economic Pressures

This rating is justified by the impact of the health crisis due to the coronavirus on the Moroccan economy and on public and external finances, according to the New York rating agency. According to Fitch Ratings analysts, a decline in budget revenues and a historically significant contraction in GDP will lead to a significant increase in public debt, while the consequences on industry and tourism will impact the large current account deficit and net external debt.

According to the experts, the impact of the pandemic on the budget and the plans to expand social services in a context of unemployment could aggravate the debt stabilization efforts, despite the government’s efforts.

The American agency Fitch Ratings forecasts an increase to 7.9% of the budget deficit as a percentage of GDP in 2020 against 6.5% in 2021 and 4.1% (excluding privatization revenues) in 2019. As for the growth prospects, the agency reports that they will experience a significant economic contraction with a GDP decline of 6.5%, due to disruptions related to the health crisis and a two-year drought.

This rating comes a few days after the downgrade of Morocco’s sovereign rating by Standard & Poor’s. This American rating agency had lowered the outlook from stable to negative, while preserving Morocco’s BBB-.