NewsNorth AfricaMorocco eyes IMF deal on new credit line by end of year

Tue,20Nov2018

Posted on Wednesday, 24 October 2018 17:05

Morocco eyes IMF deal on new credit line by end of year

By Reuters

Managing Director of International Monetary Fund (IMF) Christine Lagarde talks during a press conference ahead of the annual meetings of the IMF and World Bank in Bali, Indonesia on Thursday, Oct. 11, 2018. Photo: Firdia Lisnawati/AP/SIPAMorocco expects to reach an agreement with the IMF for a Precautionary and Liquidity Line (PPL) by the end of 2018, its economy and finance minister said on Tuesday.

Mohamed Benchaaboun did not specify the amount but said at a news conference that the ministry has already requested the IMF's PLL.

In 2016, the IMF granted Morocco a two-year, $3.5 billion credit line for Morocco to give its foreign lenders, investors and rating agencies reassurance over the country’s economic policies, allowing it to tap international capital markets at favourable borrowing terms.

The central bank governor said last month that Morocco might consider applying for the IMF's PLL in the case of major external shocks such as a spike in oil prices.

Rise in oil and gas prices

The minister confirmed a central bank announcement that Morocco was also due to issue an international bond in the beginning of 2019, but said it had not determined its size.

Morocco's treasury debt to GDP ratio for 2019 is expected to rise to 67.1% in 2019, up from 66.7% in 2018 and 65.1 in 2017, according to Finance Ministry data.

These announcements come against the backdrop of a rise in oil and gas prices by 40% compared with last year, putting a further strain on Morocco's budget.

Spending on subsidies will increase to 18 billion dirhams in 2019, up by 5 billion dirhams from this year, as Morocco continues to subsidy cooking gas, sugar and wheat.

The 2019 draft budget, submitted to the parliament on Friday, expects to curb the budget deficit to 3.3%, down from 3.8% this year.

Growth is expected at 3.2% in 2019, down from 3.6 this year while inflation is seen below 2%.

 



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