Morocco: 2025 Article IV Consultation and Third Review Under the Arrangement Under the Resilience and Sustainability Facility-Press Release; Staff Report; and Statement by the Executive Director for Morocco

2025 ARTICLE IV CONSULTATION AND THIRDREVIEWUNDER THE ARRANGEMENT UNDER THE RESILIENCEAND SUSTAINABILITY FACILITY—PRESS RELEASE;STAFF REPORT;AND STATEMENT BY THE EXECUTIVEDIRECTOR FORMOROCCO In the context of theStaff Report for the 2025 Article IV Consultation, ThirdReview Underthe Arrangement Under the Resilience and Sustainability Facility, the following documentshave been released and are included in this package: •APress Releaseincluding a statement by the Chair of the Executive Board. •TheStaff Reportprepared by a staff team of the IMF for the Executive Board’sconsideration onMarch 17, following discussions that ended onFebruary7,2025withthe officials ofMoroccoon economic developments and policies.Based oninformation available at the time of these discussions, the staff report was completedonFebruary 28. •AnInformational Annexprepared by the IMF Staff. •AnAssessmentLetterprepared by World Bank Staff. •AStatement by the Executive DirectorforMorocco. TheIMF’s transparency policy allows for the deletion of market-sensitive information andpremature disclosure of the authorities’ policy intentions in published staff reports andother documents. Copies ofthis report are available to the public from International Monetary Fund•Publication ServicesPO Box 92780•Washington, D.C. 20090Telephone: (202) 623-7430•Fax: (202) 623-7201E-mail:publications@imf.org Web:http://www.imf.org International Monetary FundWashington, D.C. IMF Executive Board Concludes 2025 Article IV Consultation,Third Review under the Resilience and Sustainability Facilitywith Morocco FOR IMMEDIATE RELEASE •The IMF Executive Board concluded the 2025 Article IV Consultation and approved theThird Review under the Resilience and Sustainability Facility (RSF) arrangement withMorocco, allowing for the immediate disbursement of SDR 375 million (aboutUS$ 496 million). •The Moroccan economy continued to show resilience despite another year of drought,with real GDP growth projected to slow modestly to 3.2 percent in 2024 amid strongdomestic demand. Growth is expected to accelerate over the medium term, driven bystronger investment and the continued structural reforms. •Saving part of the revenue windfall from tax reforms would help strengthen fiscalbuffers and protect against future shocks; while a new strategy to sustainably boost jobsand improve market competition would help addressthe increased unemploymentlinked to job displacement in the agricultural sector. Washington, DC – March 18, 2025:The Executive Board of the International MonetaryFund (IMF) concluded on March 17 the 2025 Article IV consultation1with Morocco andcompleted the Third Review under the Resilience and Sustainability Facility (RSF)arrangement, which was approved in September 2023 (seePR 23/327).The completion ofthe Third Review allows the authorities to draw SDR 375 million (about US$ 496 million),bringing total disbursement under the RSF arrangement to SDR 937.5 million (aboutUS$ 1.24 billion). In 2024, the Moroccan economy was resilient to yet another year of drought.Robustdomestic demand helped offset weak agricultural output and economic activity isexpected to have slowed only modestly to 3.2 percent in 2024. The current account deficitwidened somewhat, whereas unemployment remained elevated at about 13 percent,mainly reflecting the impact of job losses in the agricultural sector. GDP growth isexpected to accelerate to about 3.7 percent over the next few years, supported by a new series of infrastructure projects and the continued implementation of the structural reformagenda. Inflation decelerated further in 2024, mainly as the impact of supply shocks faded.This prompted Bank Al-Maghrib (BAM) to lower the policy rate twice in June andDecember. The dirham continued to move within the fluctuation band of ±5 percent. The central government fiscal deficit improved more than envisaged in the 2024Budget.The 2024 overall deficit closed at 4.1 percent of GDP, about 0.2 percent of GDPless than projected in the 2024 Budget. This reflects better-than-expected tax revenuesthat more than offset higher spending. The reform of the Organic Budget Law envisagesthe introduction of a new fiscal rule based on a medium-term debt anchor. The implementation of the announced structural reform agenda has continued.Further steps were taken to restructure SOEs, operationalize the Mohammed VIInvestment Fund, and implement the new Charter of Investment. Morocco continued to make progress in bolstering its resilience to climate changeunder the RSF arrangement. Measures implemented under the third and final review ofthe RSF arrangement aim to better protect underground water resources, prepare theground for a change in tariffication of water, improve the regulatory setting of theelectricity market to encourage private sector’s production of renewable energy, andreinforce fiscal and financial systems’ resilience to climate change-related risks. Following the Executive Board’s discussion