S&P Global Ratings maintains Morocco's rating at BB+, with a stable outlook on economy

S&P Global Ratings maintained Morocco’s rating unchanged, projecting that the Moroccan economy will expand by 1.4% this year, after bouncing back by 7.9% in 2021.

The average headline inflation is expected to speed up to about 5.9% in 2022, and the budget deficit will reach about 5.6% of GDP, the agency estimated.

“The surge in global energy and food prices, alongside the repercussions of drought, will weigh on Morocco’s growth in 2022,” added the same source, noting that the Moroccan government has implemented measures to cushion the impact of rising prices on businesses and households.

Additionally, the rating agency summed up the performance of exports, the good recovery of the tourism sector, the increase in remittances from Moroccans living abroad, the high level of foreign direct investment (FDI), and the adequate level of foreign exchange reserves, they all represent favorable factors to GDP.

“Phosphates exports and the recovery in tourism should partly offset the increase in the import bill, which is a key ingredient in fertilizer and representing currently more than 25% of Moroccan exports, have supported external and budgetary revenue,” explained the same source.

Phosphate exports increased by 81.1% in value in the first seven months of 2022, with OCP Group paying a record MAD 8.1 billion ($834 million) in dividends to the government, added the same source.

Tourism, which accounts for about 7% of GDP, has performed better than expected this year, following the reopening of borders in early February 2022, specified the same source, adding that tourism receipts were 4.1% higher in the second quarter of 2022 compared with the same period in 2019.

Ongoing structural reforms will support relatively strong growth prospects as well as gradual fiscal consolidation, as the government began a comprehensive overhaul of the social security system in order to expand coverage of health care and social transfers, said the same source.

The 2021 framework laws aim to simplify and broaden the tax base and social contribution, as well as rework the state-owned enterprises’ sector to make it more efficient. Other pro-business reforms aim to prioritize green energy investment, digitalization, and modernization of the legal, institutional, and regulatory framework, added the US agency.

S&P Global Ratings agency has more than 150 years of experience in providing financial data, aiming to help promote universal benchmarking, transparency, and business growth across 128 countries worldwide.