Morocco Taps $6.2 Billion Precautionary Loan from IMF

  • North African country implementing political and economic reforms
  • Credit line underpins Morocco’s strong economic fundamentals and solid policy track record
  • Morocco says liquidity line is insurance policy if international conditions worsen
  • The 24-month loan is provided under the IMF’s new Precautionary Liquidity Line (PLL). It will provide a useful insurance against external shocks in light of heightened uncertainty worldwide, and allow the authorities to continue with their home-grown reform agenda aimed at boosting inclusive economic growth.

    The PLL was added to the IMF lending toolkit in 2011.

    The IMF’s online news magazine, IMF Survey, spoke with the Morocco mission chief Dominique Guillaume to discuss the reasons for the liquidity line and prospects for the country’s economy.

    IMF Survey: Why does Morocco need a liquidity line from the IMF?

    Guillaume: This liquidity line is precautionary and Morocco has said that it does not intend to draw on it in the absence of exogenous shocks. The country has solid economic fundamentals and a track record of implementing sound policies. So this loan is a bit like taking out an insurance policy.

    The country is on the right track but the world economy is in a particularly fragile situation right now and it is sensible to take precautions in case of a hike in oil prices or if things take a further downturn in Europe, which is Morocco’s main trading partner.

    The PLL will strengthen investors’ confidence and facilitate international market access by signaling that Morocco’s current policies are sound, and that the authorities have adequate resources to draw upon if needed.

    IMF Survey: What is a PLL and why is it right for Morocco?

    Guillaume: This instrument is designed to flexibly meet the liquidity needs of member countries with sound economic fundamentals but with some remaining vulnerabilities.

    Our financial assistance is designed to support the authorities’ economic strategy by providing rapid access to resources—similar to an insurance policy—in the event of external shocks or a worsening international situation.

    IMF Survey: What’s the outlook for Morocco? How do you see prospects for the country’s economy?

    Guillaume: Overall real GDP growth is projected to slow from about 5 percent in 2011 to about 3 percent in 2012, largely as a result of poor rainfall, but is expected to rebound...

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