- The IMF Executive Board approved the second review of Morocco’s Resilience and Sustainability Facility (RSF) arrangement, allowing for an immediate purchase of 312.5 million SDRs (approximately $415 million).
- The authorities continue to demonstrate a strong commitment to Morocco’s transition to a greener economy.
The Executive Board of the International Monetary Fund (IMF) completed, on November 11, 2024, the second review of the Resilience and Sustainability Facility (RSF) program in favor of Morocco, according to an IMF press release and including Article19 .ma obtained a copy this Wednesday.
The completion of the review allows Moroccan authorities to draw down the equivalent of 312.5 million SDR (approximately 415 million US dollars), bringing the total disbursement under the program to 562.5 million SDR (approximately 747 million US dollars). of US dollars).
While agricultural production suffered another drought in 2024, non-agricultural production remained robust and domestic demand is strengthening.
The loss of jobs in the agricultural sector is keeping unemployment higher than before the pandemic. Inflationary pressures have eased and Bank Al-Maghrib (BAM) reduced its key rate in June 2024.
The budget deficit is on track to meet the 2024 budget target, with higher current spending offset by higher-than-expected revenue. Strong revenues from tourism, exports of goods and remittances from migrants have helped keep the current account deficit at low levels.
Morocco continues to make progress in strengthening its resilience to climate change and seizing the opportunities offered by decarbonization, within the framework of the RSF mechanism.
Significant investments in water infrastructure aim to address water scarcity and will need to be complemented by demand management reforms. Continued progress towards the liberalization of electricity markets, a key dimension of the FSR, is necessary to boost private sector participation in renewable energy. This will not only help Morocco achieve its Nationally Determined Contribution (NDC) targets, but will also reduce its dependence on imported fuels, improve business competitiveness and help create jobs.
Following the Board of Directors’ discussions on Morocco, Mr. Kenji Okamura, Deputy CEO and Acting Chairman, made the following statement:
“Moroccan authorities continue to make steady progress in strengthening Morocco’s resilience to climate change, building on very strong fundamentals and policy frameworks and a sustained track record of effective policy implementation. The results achieved under the Resilience and Sustainability Facility (RSF) have been strong. The authorities are aware of Morocco’s high exposure to risks linked to climate change and natural disasters and remain committed to the green transition and strengthening climate resilience.
“The focus on decarbonization, while limiting the impact on the most vulnerable, is welcome. In the current socio-economic context, characterized by still high food prices and high unemployment, it seems more socially acceptable to continue increases in excise duties on coal and other highly polluting products than an increase in VAT on fossil fuels. The planned replacement measure will provide an important price signal, consistent with the authorities’ decarbonization objectives. The estimated potential contribution of the new measure to the reduction of GHG emissions is also comparable to that of the old measure, preserving the overall solidity of the RSF system.
“The rapid implementation of the remaining measures under the RSF agreement will be crucial to supporting Morocco’s green transition. Efforts should focus on further liberalization of the electricity sector, greening the tax system, addressing the risks that climate change poses to the stability of fiscal and financial systems, and protecting groundwater resources. of the country, which are dwindling. The recently released Climate Finance Development Strategy 2030 plays an important role in mobilizing private climate finance. »
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