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Morocco — Beyond Debt: Sustainable Pathways to Higher Growth

Author

Listed:
  • Abdelaaziz Ait Ali

    (Policy Center for the New South)

  • Fatima Ezzahara Mengoub

    (PCNS)

  • Mahmoud Arbouch

    (PCNS)

  • Fahd Azaroual

    (PCNS)

  • Oumayma Bourhriba
  • Youssef El Jai
  • Badr Mandri

Abstract

Like many developing countries, Morocco faced a significant increase in public debt following the COVID-19 pandemic. In 2022, Central government debt reached 69.6% of GDP, up from 60.3% in 2019, highlighting the need for a thorough analysis of debt sustainability. This paper examines the main trends in the Moroccan economy over the past two decades, including growth performance, monetary policy and financial conditions and external balances. It provides an overview of Morocco's economic landscape and highlights the main challenges that have affected the orientation of fiscal policy. It uses a debt sustainability analysis model to assess the trajectory of fiscal policy, examining different scenarios including potential shocks such as inflation, GDP growth, and interest rates. The results of the model show that, under most scenarios, Morocco's public debt should stabilize and consolidate, with an overall sustainable trajectory. However, in a pessimistic scenario characterized by persistent domestic inflation, a permanent decline in economic growth and rising interest rates at both national and international level, public debt increases steadily. The paper concludes with policy recommendations focusing on short-, medium-, and long-term reforms.

Suggested Citation

  • Abdelaaziz Ait Ali & Fatima Ezzahara Mengoub & Mahmoud Arbouch & Fahd Azaroual & Oumayma Bourhriba & Youssef El Jai & Badr Mandri, 2023. "Morocco — Beyond Debt: Sustainable Pathways to Higher Growth," Working Papers 1664, Economic Research Forum, revised 20 Nov 2023.
    • Handle: RePEc:erg:wpaper:1664
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    References listed on IDEAS

    as
    1. Hicham BENNOUNA & Kamal LAHLOU & Anas MOSSADAK, 2016. "Analyse des canaux de transmission de la politique monétaire au Maroc," Document de travail 2016-1, Bank Al-Maghrib, Département de la Recherche.
    2. Mr. Maximilien Queyranne & Daniel Baksa & Vassili Bazinas & Azhin Abdulkarim, 2021. "Morocco’s Monetary Policy Transmission in the Wake of the COVID-19 Pandemic," IMF Working Papers 2021/249, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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