The drop in the key rate, a positive signal to investors (Mehdi El Fakir)

Bank Al-Maghrib has just lowered its key rate to 2.5%. What impact on the economy can we expect? Is this a political boost or an economic boost? On December 18, 2024, the show “L’Info en Face” from “Groupe Le Matin”, hosted by Rachid Hallaouyreceived Mehdi El Fakireconomic and financial analyst, chartered accountant and auditor to answer these questions.

According to the guest of the show, this decision aims to revive the economy by sending a positive signal to economic agents. And to specify that: “The Central bank acts in a neutral and technical framework, far from political considerations. This reduction is therefore a measure motivated by the stabilization of inflation and the socio-economic situation overall. “This measure is above all technical and pragmatic,” explains our specialist. The main objective is to stabilize the monetary balances and encourage growth. And although the immediate effects are limited, this initiative is a lever to encourage economic agents to invest, especially in a context marked by forecast growth of 2.6% for 2024. “The objective is to create a environment conducive to revival of the economy“, he explains.

In the banking spherethis drop in key rate will it effectively stimulate the distribution of credits? In other words, will Moroccan banks play the game? For our guest, “banks adapt their policies according to perceived risk”. For him, the commercial margins and the spreads directly influence their decisions. He notes that with a breakage rate of 12-13%, irrecoverable debts weigh heavily on their decisions. However, he emphasizes weekly injection 60 to 70 billion dirhams by the Central Bank to maintain liquidity.

The transmission of this decline to commercial credits will therefore depend on the context and the bank confidence in the economic agents. Common point with other analysts who have followed one another on the issue: the drop in the key rate is not systematically and immediately passed on to loans.

The reduction in the key rate also raises questions about the economic recovery and the complementary policies. Will it, for example, contribute to a reduction in unemployment? Mehdi El Fakir responds that monetary policy alone is insufficient. It specifies that an integrated strategy is necessary to resolve the economic challenges structural. “Job creation relies on structuring investments and a well-designed economic policy. Productive investment is the key to generating sustainable growth,” he insists. In addition, he recalls that with growth forecast at 2.6% in 2024 and the allocation of a budget of 14 billion dirhams dedicated to employment in the finance law 2025the challenge remains to effectively mobilize these resources to generate quality growth and durable.

Regarding the public debt managementone of the questions that often arises is whether the country's current debt is sustainable. For Mehdi El Fakir, reforms are necessary. “With debt service increasing from 38 to 45 billion DH in two years, Morocco must rethink its management mechanisms“, he insists. He recommends the creation of a National Investment Bank to optimize the debt and strengthen Public-private partnerships (PPP). Finally, he recalls that the tax contribution represents 90% of State revenue, a fragile balance to be protected.

Why are tax amnesty schemes being renewed, and what are their real results? The guest criticizes a lack of political and fiscal marketing. “With 392 billion dirhams outside the banking circuit, the amnesty offers a unique opportunity,” he believes. It recalls the four amnesty shutters (cash, currencies, payment incidents, CNSS) and notes that their potential impact will depend on the trust and transparency of the authorities. “Injecting even half of these amounts into the banking circuit could revive the economy,” he adds, regretting an insufficient communications strategy.

Can Morocco afford a new loan on the international markets in 2025? Mehdi El Fakir believes that the timing could be favorable, thanks to a stabilization of geopolitical tensions and the return of a positive international situation. However, he warns: “Debt must finance strategic projectsnot fill social deficits. With a potential target of 30 to 35 billion dirhams to be raised and a previous rate of 6 to 6.5%, the expert calls for careful preparation to take advantage of opportunities while limiting risks.