Moroccan experience in integrating fiscal and monetary policies to strengthen resilience highlighted in Cairo

Moroccan experience in integrating fiscal and monetary policies to strengthen resilience highlighted in Cairo
Moroccan experience in integrating fiscal and monetary policies to strengthen resilience highlighted in Cairo

Thursday, May 23, 2024 at 5:34 p.m.

Cairo – The Minister of Economy and Finance, Nadia Fettah, highlighted, during the joint annual meetings of Arab financial institutions held Thursday in Cairo, the Moroccan experience in the integration of budgetary and monetary policies for manage shocks and build resilience.

During a panel on “Financial sector policies in managing shocks and building resilience in situations of uncertainty”, attended by officials from Arab and international financial institutions, Mr. Fettah indicated that Like most other countries, Morocco has not been spared from the global rise in inflation levels.

Since the start of 2022, the Kingdom has been affected by an unprecedented rise in international energy and food prices following the global economic recovery from the COVID-19 pandemic, geopolitical tensions and disruptions. in global supply chains, she noted.

These external pressures have gradually passed on to production costs and local products and transformed into internal pressures, exacerbated by internal supply shocks which have affected certain foodstuffs due to successive years of drought and water stress experienced by Morocco, explained the minister.

In this context, noted Ms. Fettah, “Bank al Maghrib” changed the direction of its monetary policy for the first time in 14 years, from September 2022, by raising the key interest rate three times in a row a total of 150 basis points to bring it to 3%, emphasizing that this restrictive approach to monetary policy, in line with the global trend of central banks, made it possible to avoid the worsening of inflation forecasts in order to facilitate their return to desired levels.

Regarding the government’s budgetary policy, the minister said that in order to contain the negative effects of economic shocks, including inflationary pressures, emergency and targeted budgetary measures have been adopted to mitigate the effects of the rising prices on the purchasing power of families.

The government intervened at the first signs of inflation through a set of urgent measures such as the continuation of subsidies for certain basic products through the Compensation Fund and the granting of exceptional support to professionals in the transport sector. road transport, she recalled.

Likewise, she continued, customs duties on imports of wheat and legumes were suspended, value added tax was exempted for products and equipment imported for exclusively agricultural use, while transfers exceptional funds were allocated to support certain public institutions whose financial situation was affected by the surge in material prices on international markets, in exchange for maintaining the stability of the prices of their services.

The Kingdom, aware of the need to take the necessary measures to strengthen the resilience of agricultural production in the face of scarcity of rainfall and climate change and, therefore, improve the supply of agricultural products, has launched a series of measures aimed in particular to adapt the “Generation Green” strategy to these challenges and maintain the balance of production chains in order to ensure the abundance of products at reasonable prices and to realize seawater desalination projects for agricultural purposes in preserving and sustaining water resources, she continued.

According to Ms. Fattah, the monetary policy adopted by Bank Al-Maghrib, alongside the government’s proactive and exceptional measures to deal with the effects of drought and support agricultural products, contributed to stopping inflation, which allowed this institution to slow down the cycle of monetary tightening from June 2023 by keeping the main interest rate stable at 3%, taking into account the delays in transmitting its decisions to the real economy and the tangible drop in inflation.

The minister also indicated that in parallel with temporary measures aimed at limiting the effects of successive shocks, the government is striving to accelerate the pace of structural reforms by adopting a policy establishing a balance between the sustainable financing needs of projects. of reform and the reconstitution of budgetary margins, in a context marked by the need to accelerate growth, create employment opportunities and strengthen the resilience of the national economy in the face of crises.

And to note that the budgetary policy was based on several levers, notably those concerning the strengthening of the public finance framework, the continuation of reforms of the tax system and the support system by gradually reducing compensation expenditure in parallel with the establishment of ‘a direct support system based on optimal targeting of vulnerable and needy groups.

It is also, added the minister, the continuation of the reform of public institutions and the subcontracting sector, and the development of innovative financing mechanisms based on partnerships with institutional investors and the private sector, in parallel with the activation of the Mohammed VI Fund for Investment, as promising alternative financing tools to finance large projects and encourage private sector investments.

The objective, said Ms. Fattah, is to guarantee the continuation of the State’s investment effort and the improvement of its efficiency while reducing pressure on public resources and recourse to debt.

The minister stressed that the guarantee and financing mechanisms have also been strengthened to support companies’ access to sources of financing, evoking, in the same context, the strengthening of the national guarantee system by consolidating the principle of control prior budgetary allocations to limit recourse to public finances and by subjecting the Central Guarantee Fund (CCG) to precautionary rules under the supervision of Bank Al-Maghrib to stimulate and facilitate access to financing for small and medium-sized businesses.

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