IMF approves 2-year $5 billion flexible credit line for Morocco

Morocco has obtained the agreement of the IMF for a flexible credit line of USD 5 billion.

The decision was voted this Monday evening, April 3, during a board meeting of the international institution.

“The IMF approved today [Monday, April 3, 2023, ed.] a two-year agreement in favor of Morocco under the Flexible Credit Line (FCL), designed for crisis prevention, in the amount of approximately 5 billion dollars,” announced a statement from the international institution.

“Morocco qualifies for this credit line because of its very strong economic policies, institutional frameworks, and economic fundamentals, as well as its commitment to maintain these policies in the future.”

“The agreement will strengthen Morocco’s external reserves and provide temporary insurance against plausible extreme risks on a temporary basis. The Moroccan authorities have indicated that they intend to treat this agreement as a precautionary arrangement.”

Since 2012, Morocco has benefited from four successive Precautionary and Liquidity Line (PLL) arrangements, each in the amount of about $3 billion. The first PLL was approved on August 3, 2012, and three others were approved on July 28, 2014, July 22, 2016, and December 17, 2018.

The fourth PLL expired on April 7, 2020, when authorities purchased all available resources under the PLL to limit the social and economic impact of the COVID- 19 pandemic and allow Morocco to maintain an adequate level of official reserves to mitigate balance of payments pressures, the IMF recalls.

“While PLL arrangements have served the country well in the past, the very strong underlying institutional frameworks, and economic track record in implementing very sound economic policies, as well as the continued commitment to maintain these policies in the future, all justify the transition to an FCL arrangement.”

“An FCL arrangement would help Morocco meet the challenge of rebuilding policy space, while accelerating the implementation of its structural reform program in an increasingly risky external environment.”