IMF approves $4.5 billion flexible credit line for Morocco

Thursday 03 April 2025 - 16:20

By: Dakir Madiha

IMF approves $4.5 billion flexible credit line for Morocco

The Executive Board of the International Monetary Fund (IMF) has granted a new two-year agreement for Morocco under the Flexible Credit Line (FCL), amounting to approximately $4.5 billion, or 386% of the country's quota.

According to a statement released on the IMF's official website, this agreement replaces the previous FCL, which was canceled by Moroccan authorities, who reiterated their intention to use it purely as a preventive measure.

This new agreement marks the second FCL extended to Morocco, aligning with a gradual strategy aimed at reducing access to IMF resources as risks permit. The first FCL was approved in April 2023 for a total of 3.7262 billion Special Drawing Rights (417% of the quota). From 2012 to 2020, Morocco also benefited from four successive precautionary and liquidity lines.

Morocco's eligibility for this instrument is based on the strength of its institutional and political frameworks, the robustness of its economic fundamentals, and its history of implementing diligent policies. The IMF has praised the ongoing commitment of Moroccan authorities to maintain these policies moving forward.

Kenji Okamura, the IMF's Deputy Managing Director and Acting Chair of the Executive Board, highlighted the resilience of the Moroccan economy in the face of recent shocks, despite a series of droughts that severely impacted agricultural production and led to historically high unemployment. He noted that the implementation of well-calibrated fiscal, monetary, and financial policies, alongside a recent successful bond issuance in international markets, underscores the strength of Morocco's macroeconomic framework.

Okamura added that Morocco is also pursuing an ambitious program of structural reforms aimed at achieving more resilient, inclusive, green growth driven by the private sector. The new FCL will support these efforts while providing assurance against external risks. Morocco remains vulnerable to deteriorating global economic conditions, rising commodity prices, and the recurrence of droughts.

Economically, the IMF reminded that Morocco has faced several significant shocks in recent years, including the global pandemic, the repercussions of Russia's invasion of Ukraine, a devastating earthquake in 2023, and five droughts in six years. Despite these disruptions, macroeconomic stability has been maintained through effective policy responses and continued fundamental reforms. Medium-term growth is estimated at 3.6%, supported by infrastructure projects and the advancement of structural reforms.

The IMF considers the FCL to be the most suitable instrument to assist Morocco in strengthening its foreign reserves and accelerating its reform program in a context marked by persistent global uncertainty.