Jouahri: inflation to ease in 2023, crypto is inevitable but needs framing

The Wali of Bank al Maghrib (BAM) Abdelatif Jouahri, said that “the introduction of cryptocurrency in Morocco is imminent, but that it needs to be framed both nationally and internationally.”

During the customary presentation of the Wali for the economic situation of the country this Tuesday, March 22, Jouahri said that BAM “deployed a commission to study the use and integration of this type of currency, in synergy with the World Bank,” while taking other countries as an example for a proper legislative framework.

Jouahri said that “crypto comes with great risk, such as hard traceability and possible funding of terrorist organizations, and many financial and monetary actors in Morocco are not yet ready to integrate its use.”

From infrastructure to legislation, Morocco is “not ready for crypto as of yet, but the country is well on its way to progress in the matter,” hammered the Wali, adding that “great progress has already been made in the integration of technologies in monetary transactions, and we are not against innovation.”

Regarding the current measures, the Kingdom’s central bank is taking to tackle the effects of global inflation on domestic purchasing power, the head of BAM reiterated that “the finance bill for this year will not require revision, as the Ministry of Finance had allowed for considerable risk margins, which renders the continuation of this year’s financial plan possible.”

Jouahri said that in light of the global crisis, negotiating new precautionary and liquidity lines with the International Monetary Fund has become more feasible, calling the conflict’s repercussions “shocking.”

The Wali of Bank Al-Maghrib explained that “the treasury could consider discussing the acquisition despite the significant balance of hard currency.”

Regarding resorting to the international market for loans, as is foreseen in the 2022 Finance Law, Jaouahri said that “the treasury must analyze the market situation and its conditions to seize the appropriate opportunity for that.

After recording a 1.4% inflation rate in 2021, the indicator is expected to rise up to 4.7% in 2022 before settling back at 1.9% in 2023, said the Wali, while specifying that “such forecasts take the international context into account,” which includes the Russia-Ukraine crisis, the rise of raw materials’ prices, in addition to “the difficult drought” that plagued Morocco this year.

According to BAM’s forecasts, the agricultural year should record cereal production of around 25 million quintals, having noted 103.2 million quintals a year earlier.

Agricultural added value is therefore expected to fall by 19.8%, reducing economic growth to 0.7% in 2022 after a rebound that would have reached 7.3% in 2021.

“In 2023, assuming an average harvest of 75 million quintals, agricultural added value would increase by 17%, bringing growth to 4.6%” said Jouahri, who maintained that BAM forecasts non-agricultural activities will consolidate gradually, with a 3% increase in their added value in 2022 and 2023.

Imports are expected to increase by 14.9% in 2022, due to the rise in the energy bill and the increase in purchases of agricultural and food products and consumer goods. In 2023, the increase would be limited to 1.1%, due in particular to the expected reduction in the energy bill.

Exports, on the other hand, are expected to improve by 12.5% in 2022 and 3.4% in 2023, driven mainly by increased sales of automotive products and higher sales of phosphates and derivatives in 2022.

Travel revenues are expected to recover gradually, rising from MAD 34.3 billion in 2021 to MAD 47 billion in 2022 and MAD 70.9 billion in 2023.

Remittances from Moroccans living abroad should gradually return to their pre-crisis level, reaching MAD 79.3 billion in 2022 and MAD 70.8 billion in 2023, after having recorded a “historical” MAD 93.3 billion in 2021.

As for FDI, revenues are expected to be around 3% of GDP in 2022 and 3.5% in 2023, confirms the Wali.