Morocco will further widen the fluctuation band for the dirham when economic conditions permit, the International Monetary Fund has said in a report, quoting Moroccan officials.
In January 2018, the kingdom widened the band in which the dirham trades against hard currencies to 2.5 percent either side of a reference price from the previous 0.3 percent. It wanted to make its exports more competitive and protect its foreign exchange reserves.
“The authorities intend to move to the next phase of this reform for preventative purposes as soon as economic conditions allow them to do so,” Central Bank Governor Abdellatif Jouahri and Finance Minister Mohamed Benchaaboun said in a letter included in a report published by the IMF.
Such a transition will help the economy better absorb potential external shocks, preserve its competitiveness, and support its diversification, said the letter to IMF chief Christine Lagarde.
Morocco’s current-account deficit is projected at 4.3 percent of GDP, up slightly from 4.5 percent last year.
Ahmed Lahlimi, who heads planning agency HCP, has said that Morocco's economy is expected to grow by 2.9 percent in 2019, marginally slower than last year and still driven by domestic demand.
Despite an exceptional crop year in 2018, the economy grew by 3 percent last year, down from 4.1 percent in 2017, due to "a drop in non-agricultural activity and a decrease in external demand," he said last week.
The budget deficit would reach 3.7 percent in 2019, down from 3.9 percent in 2018.
Last month, the IMF approved a Precautionary and Liquidity Line (PLL) worth about $2.97 billion as an insurance against economic shocks.
Under this precautionary arrangement, the fourth of its kind since 2012, Morocco can access about $1.73 billion in the first year, the IMF said.
Morocco is also expected to issue an international sovereign bond this year.
The planning agency forecast Morocco's total public debt will rise to 82.5 percent of GDP in 2019 from 82.2 percent in 2018.
