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Fitch Ratings maintains Morocco’s “BB+” rating

The American rating agency Fitch Ratings has maintained its default rating for Morocco’s long-term foreign currency issuers at “BB+” with a stable outlook. It anticipates an increase in debt and budget deficit in 2022, due to the gloomy economic climate and rising commodity prices.

In a statement, the rating agency Fitch Ratings again confirmed Morocco’s sovereign rating at BB+ with a stable outlook, identical to what the agency had announced at the end of December 2021.

As a reminder, on April 28, 2020, this agency had maintained Morocco’s rating at BBB- with a negative outlook instead of stable previously. On October 23, the rating was downgraded from BBB- to BB+, thus causing Morocco to lose its investment grade.

In its press release, Fitch Ratings underlined the complex economic situation that the Kingdom is going through, in particular with the drought and the expected drop in agricultural GDP in 2022 after an appreciable rebound in 2021. However, the agency notes that the country retains good fundamentals macroeconomics to deal with the difficulties. “Morocco has a favorable debt composition, including a moderate share of foreign exchange in total general government debt and support from official creditors,” says Fitch.

The agency also notes that the Kingdom holds reasonably comfortable external liquidity cushions. The national macroeconomic balance sheet is stable, “reflected by relatively low inflation and GDP volatility before the pandemic”. Nevertheless, Fitch notes that these elements are offset by “weak development and governance indicators, high public debt and larger budget and current account deficits than those of peers”.

The rating agency expects weak economic growth in an inflationary environment that should continue to increase by the end of the year.

Sluggish growth and inflation expected at 4.7% in 2022

This year, Fitch anticipates overall soft growth at 1.1%. The rating agency’s forecasts are based in particular on the fact that the country is going through “the worst drought in decades, leading to a contraction in agricultural production and an unfavorable international environment”.

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