FShould we really be worried about the public debt in Morocco? With each budget preparation, the question comes up repeatedly among analysts. However, a thorough examination of the data and the strategy adopted tends to reassure. The government, aware of the issues, is committed to disciplined debt management. Not only does it remain sustainable, but it is also supported by structured and thoughtful choices. Being predominantly domestic, long-term and backed by fixed rates (with a share of over 89%), public debt rests on solid foundations.
The ambition to bring the debt ratio below 66.3% of GDP by 2027, despite the trajectory of current reforms and investments, demonstrates the budgetary resilience targeted by Morocco. This year, debt cost and risk indicators remain well oriented. In the first half of 2024, the weighted average rate (TMP) of Treasury bills fell to 3.777%, compared to 3.923% at the end of 2023, which means an improvement in financing conditions. The average lifespan of debt is also increasing, reaching 7 years and 9 months (+6 months).
In detail, the domestic debt increases to 7 years and 3 months (+7 months), driven by increasing interest for maturities of 5 years and more, while the external debt reaches 9 years and 2 months (+2 months) . In the short term, the proportion of debt in the portfolio increases to 12.4% in June 2024 (compared to 11.8% at the end of 2023). This increase mainly concerns domestic debt (15% compared to 13.9%), while the share of the short term in external debt decreases to 4.3% (compared to 8.7%). At the same time, the share of variable rate debt remains stable at 11.4%. For its part, active debt management by the Treasury Department made it possible to alleviate refinancing pressures, with six exchange operations totaling 14.2 billion dirhams in repurchase, including 8.3 billion for 2024 and 6 billion for 2025. These exchanges reduce the schedule of payments by nearly 2.1 billion DH per month on average over the two years. This strategy resulted in savings on interest charges: 37.9 million DH earned, including 34.1 million from the early redemption of 2024 maturities and 3.8 million DH on the 2025 deadlines. proactive approach not only optimizes debt costs, but also contributes to better control of cash flows, thus alleviating pressure on the state budget.
A favorable domestic market
In terms of financing, the domestic market continues to offer favorable conditions to the Treasury. Since 2023, investors have shown increasing interest in medium and long maturities, taking advantage of a fall in rates in a context of disinflation. The 25 basis point easing of the key rate by Bank Al-Maghrib in June 2024 also reinforced this trend, supporting domestic financing dynamics. As a result, investor demand fell by 56.7% in one year, reaching 171.9 billion DH at the end of June 2024. This decrease is explained by a drop in the gross financing needs of the Treasury, reflecting a reduction debt payments.
Financing was concentrated on maturities of five years and more, thus capturing 60.4% of the raisings, compared to only 19.5% the previous year. This prudent choice makes it possible to spread out maturities and optimize the risk profile of domestic debt. On the external financing side, the Treasury also reviewed its strategy by reducing drawings, which stand at 21 billion DH for the first half of 2024, compared to 33.4 billion DH in 2023. This rationalization is in line with the objective of optimizing costs and risks. The funds mobilized come exclusively from official creditors, under advantageous conditions. In terms of allocation, 16 billion DH were dedicated to structural reforms, while 3.3 billion DH, from an IMF loan, aims to strengthen the budgetary resilience of the Kingdom.
