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Fitch confirms Morocco’s issuer default rating

Fitch Ratings has confirmed Morocco’s long-term foreign currency issuer default rating of “BB +” with a stable outlook. In its new rating, the agency noted that Morocco’s “BB +” rating is supported by a record of macroeconomic stability reflected by relatively low inflation and GDP volatility before the pandemic; a moderate share of foreign currency debt in total debt, and relatively comfortable external liquidity reserves.

“These strengths are offset by weak development and governance indicators, high public debt, and larger budget and current account deficits than its peers,” the rating agency explains.

This year, Morocco is expected to post a budget deficit to reduce to 6.3% of GDP, from 7.7% in 2020 (excluding privatization revenues), as the economic recovery has led to a strong upturn in revenues. But current spending remains high “because of the vaccination campaign, other health spending, as well as the start of generalization of social coverage”. Fitch therefore expects budget deficits to decline only gradually as spending on the New Development Model (NDM) increases.

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