The Board of Bank Al-Maghrib, meeting on Tuesday June 16, decided to make a second reduction in the key rate by 50 basis points, bringing it down to 1.5%, and to fully release the reserve account for the benefit of banks.
In a press release, the Central Bank explains that its board has reviewed and approved the Annual Report on the Economic, Monetary and Financial Situation of the Country, as well as on the Bank’s Activities for Fiscal 2019.
“The Council analyzed and evaluated the evolution of the economic and social situation at the national as well as international level, as well as the responses brought by the authorities of the country to mitigate the effects of the pandemic of Covid-19”, they add. And to explain that “the Bank’s macroeconomic projections established in this context remain surrounded by an exceptionally high degree of uncertainty and clearly show a sharp contraction in the national economy this year followed by a certain rebound in 2021”.
Bank Al-Maghrib indicates the establishment of specific provisions to provide support for the refinancing of participating banks and microcredit associations. “These new decisions, combined with the various easing measures already implemented, in particular the widening of the collateral eligible for its refinancing operations, the strengthening of its unconventional programs, as well as the temporary easing of prudential rules, should contribute, along with those taken by the Economic Watch Committee, to mitigate the impact of the pandemic and support the recovery of the economy and employment,” notes the press release.
Given global and national conditions, “the economy is projected to contract 5.2% in 2020, the largest since 1996, according to Bank Al-Maghrib projections,” said the central bank.