Standard & Poor’s (S&P) has maintained Morocco’s sovereign debt rating BB+/B, raising the outlook associated with this rating from “stable” to “positive”, notably thanks to “improved socio-economic and budgetary reforms”. “This positive outlook reflects our expectations that Morocco will build on its recent achievements in implementing socio-economic and budgetary reforms, paving the way for stronger and more inclusive growth and a reduction in budget deficits,” the rating agency underlined in a press release published on Friday. The Moroccan economy has demonstrated “resilience” in the face of multiple shocks over the past five years and has maintained its access to domestic and external financing, noted S&P Global, adding that “the continued implementation of socio-economic and budgetary reforms will help to further formalize the economy and make it more inclusive and competitive, thus boosting GDP growth and reducing budget deficits, albeit gradually.” “Budget and current account deficits fell more than expected in 2023, to 4.4% and 0.6% of GDP, respectively, and we expect fiscal consolidation to continue,” the American agency said. S&P Global indicated that it could raise Morocco’s rating in the next 12 to 18 months « if the government continues to implement structural reforms, promoting stronger economic growth and a broadening of the tax base, while budget deficits continue to decline. » “The ongoing, albeit gradual, change in Morocco’s underlying economic structure will benefit growth prospects, economic stability and fiscal trajectory,” according to the statement. Standard & Poor’s forecasts that Morocco’s GDP growth will reach 3.4% in 2024, compared to 3.1% in 2023, supported by robust performance in the tourism, automobile and aerospace sectors, before climbing to 3.7% in 2025-2027. The influence of the organization of CAN 2025 and the 2030 World Cup Economic growth will be supported by stronger domestic demand, helped by falling inflation and increased private investment, which will benefit from ongoing economic reforms and stronger growth in the euro zone, Morocco’s main trading partner, added S&P Global. The Kingdom’s economy will also gradually benefit from the development of large-scale projects given the organization of the African Cup of Nations in 2025 and the Football World Cup in 2030, the implementation of socio-economic reforms and the expansion of Morocco’s export capacity, affirmed the American rating agency which also forecasts a reduction in the budget deficit to 3% of GDP by 2027. The Moroccan economy faced several global, regional and local headwinds in recent years, noted S&P Global, which cites soaring energy and food prices, the consequences of the Covid-19 pandemic as well as multiple episodes of drought. In 2023, the number of tourist arrivals was 12.3% higher than the 2019 level before the pandemic, noted the rating agency, noting that this is a performance “better than the global average”, despite the earthquake that hit the Marrakech region in September last year. “The current account deficit narrowed to 0.6% of GDP in 2023, compared to our previous estimate of 2.7%, partly reflecting the continued diversification of the economy,” noted S&P Global, which cites several measures taken by Morocco, including the establishment of a unified register to better target households eligible for social assistance programs and the reform of the investment charter . “Implementing structural reforms and social support programs will limit the sharp decline in budget deficits in the short term, but will support fiscal consolidation in the medium and long term,” Standard & Poor’s said. In terms of outlook, the agency expects FDI flows to gradually increase in the coming years, as the implementation of structural economic reforms makes Morocco more attractive to investors while recalling, in this context, the confidence of the international financial community enjoyed by the Kingdom which was recently reflected in the success of the bond issue carried out in March 2023.
