Morocco continues to accumulate good news since the government of Aziz Akhannouch took the reins of the country in the last quarter of the year. Fitch Ratings, a famous global rating agency, has designated the Alawi country with a rating of 'BB+' - an issue grade that this company indicates means that there is a relatively low to moderate credit risk - due to the long-term Foreign Currency Issuer Default Rating (IDR). According to this brand, the Kingdom is on a stable outlook which is due to a high macroeconomic stability of the country, which, in turn, accumulates low inflation, a moderate proportion of foreign currency debt and has comfortable external liquidity buffers.
"Morocco's fiscal deficit is expected to narrow to 6.3 per cent of GDP in 2021 from 7.7 per cent in 2020 (excluding privatisation proceeds) as the economic recovery triggered a solid resurgence in revenues," Fitch says in a press release.
For its part, the agency expects fiscal deficits to begin to gradually decline as the government's proposed New Development Model (NDM) spending increases, which focuses on increasing money for the provision of social services such as health and education, as well as an increase in the expansion of these services. Expert analysts predict that the planned revenue measures, plus the broadening of the tax base through improved tax administration and reduced transfers to the country's businesses, will be the sole beneficiaries of NDM spending, so fiscal financing risks are low. Moreover, this financing is expected to cover two-thirds of the requirements imposed by 2022 and 2023.
It is worth noting that the new government is committed to the process of vaccinating its people, in addition to the medical coverage the population receives for COVID-19 and other issues, which is a high but effective expenditure. This, according to Fitch, will mean an easing of the health crisis and lead to a rebound in the nation's GDP, which currently stands at 6.2%, but is expected to be 3.2% in 2022, which will see Morocco's long-term potential grow.
The agency adds that the executive's strategy in cooperation with the private sector and product market and labour market reforms will be effective and will help the country's economy to recover. Also, Morocco's imports and exports will increase by more than 20 per cent as there is pent-up demand for consumer goods and vehicles, as well as existing expenditures on manufacturing, medical supplies and services and energy prices that are currently high.
Morocco is in one of its best economic times, despite difficulties stemming from the pandemic, neighbourhood problems and youth unemployment. Today, the Maghreb country has a GDP of $114 billion, making it the fifth best economy in Africa and the third best in the MENA region. The Kingdom has been able to position itself, with a strategic plan over the last ten years, to achieve its rightful place. These results are due to major investments in the automobile, aeronautics and agricultural sectors, which have proven to be highly profitable for the nation. The social and political changes of recent times have led to a great stability of its political and economic system, which has resulted in large companies wanting to establish themselves in the region. In addition, the Kingdom is focused on global expansion with its investment policies. Also, its strategic position as a trade gateway to the Mediterranean Sea and thanks to its friendship with various countries outside Africa make it a key point for companies that want to expand their activity on the continent.