Fitch Ratings maintained Morocco’s rating at ‘BB+’ with a stable outlook, highlighting the country’s strong macroeconomic policies, significant support from international creditors and robust liquidity reserves. However, this assessment also takes into account the persistent challenges linked to high public debt and the vulnerability of the economy to climatic conditions. Details.
Fitch Ratings maintained Morocco’s rating at “BB+” with a stable outlook, in its ratings published on October 8, 2024. This decision is based on the country’s strong macroeconomic fundamentals, the support of its official creditors and comfortable liquidity reserves. Fitch notes, however, that these strengths are offset by development indicators lower than those of its peers, high public debt and increased exposure to unfavorable climatic conditions.
Morocco’s economic growth, which reached 3.4% in 2023, is expected to slow to 3.0% in 2024due to the decline in agricultural production due to a lack of precipitation. Fitch forecasts a gradual recovery in growth at an average of 3.5% over 2025-2026supported by a stabilization of agricultural production and a solid performance of non-agricultural sectors, such as the tourism et the car.
On the budgetary level, the deficit is projected at 4.1% of GDP in 2024down slightly from 4.3% in 2023. Fitch anticipates a gradual reduction in the deficit to a average of 3.6% over 2025-2026supported by budgetary consolidation measures and a reduction in subsidies. However, social spending is likely to continue to weigh on public finances.
Regarding public debt, Fitch expects it to reach 70% of your PIB in 2024a level which would remain stable over the following years. Although this ratio is higher than the average for countries rated “BB”, the refinancing risk remains contained thanks to a debt structure mainly at fixed rate and denominated in dirhams.
Foreign direct investments (IDE) are expected to recover in 2024 after a year 2023 marked by weak flows, due to an unfavorable global economy. This rebound would be stimulated by increased investment in the automotive sector.
Morocco’s foreign exchange reserves, estimated at $37.3 billion in August 2024, will continue to play a crucial role in the country’s economic stability, reinforced by a flexible credit line of 5 billion dollars granted by the IMF.
Finally, Fitch underlines that, despite relative political stability, Morocco remains faced with challenges in terms of governance and social tensions, particularly due to unemployment high among urban youth.
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