Morocco’s banking liquidity deficit shrinks by 8.26%, signaling stronger financial health

Saturday 25 January 2025 - 12:22

By: Dakir Madiha

Morocco’s banking liquidity deficit shrinks by 8.26%, signaling stronger financial health

Morocco’s banking liquidity deficit has seen a notable improvement, declining by 8.26% to reach MAD 136.8 billion ($13.4 billion) in January 2025. This shift underscores healthier financial conditions and provides the economy with greater flexibility to grow and adapt.

According to BMCE Capital Global Research (BKGR), the reduction reflects the positive impact of fiscal amnesty measures, which have alleviated pressure on the financial system. Bank Al-Maghrib (BAM), the country’s central bank, further contributed to this improvement by scaling back its seven-day advances by MAD 2.32 billion ($228 million), bringing the total to MAD 57.4 billion ($5.6 billion).

Treasury placements also experienced a significant decline, with the daily maximum balance dropping to MAD 12.3 billion ($1.2 billion) from MAD 29.4 billion ($2.9 billion) the previous week. Meanwhile, the weighted average interest rate remained stable at 2.5%. However, the Moroccan Overnight Index Average (MONIA), a key benchmark for short-term money market rates, dipped slightly to 2.464%.

These developments point to a more robust financial environment, which could help lower government borrowing costs and maintain stability. BKGR anticipates that BAM will continue to reduce its interventions, with cash advances projected to fall to MAD 55.1 billion ($5.4 billion) in the coming week.

The banking sector’s resilience was further highlighted by a 17.5% increase in profits during the first half of 2024. The Systemic Risk Coordination and Surveillance Committee (CCSRS), which oversees the financial system, noted that banks maintain ample capital to cover risks, with solvency and Tier 1 capital ratios well above regulatory requirements. Stress tests confirmed the sector’s ability to withstand potential financial shocks, reinforcing confidence in its stability.

This positive trajectory in Morocco’s financial landscape not only bolsters economic growth but also positions the country to navigate future challenges with greater confidence.