Fitch affirms Morocco’s BB+ rating with stable outlook

09:47

By: Azzat Manal

Fitch affirms Morocco’s BB+ rating with stable outlook

Fitch Ratings has affirmed Morocco’s long-term foreign-currency issuer default rating at “BB+” and maintained a stable outlook, pointing to the country’s sound macroeconomic policies, adequate external liquidity buffers and strong support from official creditors.

The rating agency said these factors contribute to a relatively favorable sovereign debt profile, while also identifying structural constraints including comparatively weaker development and governance indicators, elevated government debt and the Moroccan economy’s exposure to adverse weather conditions.

Fitch expects Morocco’s central government budget deficit to widen to around 4% of gross domestic product in 2026, compared with 3.5% in 2025. The agency linked the deterioration partly to temporary spending pressures resulting from the energy shock associated with disruptions around the Strait of Hormuz. Higher energy costs have increased expenses related to butane subsidies, support for transport operators and transfers to the national electricity and water utility.

The rating agency expects fiscal pressures to ease in the following years, forecasting an average budget deficit of around 3.4% of GDP in 2027 and 2028. At the same time, public investment is expected to remain elevated as Morocco continues to expand infrastructure ahead of the 2030 FIFA World Cup.

A significant portion of this investment is expected to be carried out through state-owned companies, public-private partnerships and other entities outside the central government budget. Fitch nevertheless warned that cost overruns, greater-than-expected government support or the accumulation of contingent liabilities could create additional risks for public finances.

Morocco’s government debt is projected to remain relatively stable at around 67% of GDP by 2028, according to Fitch. The figure would remain above the median expected for countries in the “BB” rating category, highlighting the importance of continued fiscal consolidation over the medium term.

The agency also expects Morocco’s current-account deficit to widen to approximately 3.8% of GDP in 2026 before narrowing to an average of 2.6% in 2027-2028. The deterioration is expected to reflect higher energy import costs and weaker external demand, particularly from Europe, Morocco’s main export market.

At the same time, Fitch highlighted Morocco’s external financial buffers. Foreign-exchange reserves reached around $48 billion at the end of 2025, and the agency expects reserves to continue benefiting from export revenues and a recovery in net foreign direct investment inflows. It forecasts that reserves will cover an average of about 5.1 months of current external payments between 2026 and 2028.

On economic growth, Fitch expects Morocco’s real GDP expansion to slow to about 4% in 2026 before averaging around 4.2% over 2027-2028. The agency cited higher energy and transportation costs and softer European demand as factors weighing on growth, while stronger agricultural output, infrastructure investment, industrial activity and tourism are expected to provide support.

The latest assessment leaves Morocco’s sovereign rating unchanged while highlighting both the resilience of its macroeconomic framework and the challenges facing public finances. Fitch’s analysis indicates that developments in energy prices, external demand, public investment and fiscal management will remain important factors for Morocco’s economic outlook.