IMF Urges Morocco to Target 2% Inflation, Cut Debt Amid Economic Growth
Doha - Morocco\u2019s economy is set to grow by 3.9% in 2025, up from 3.2% in 2024, as the International Monetary Fund (IMF) recommends the country\u2019s central bank to adopt an inflation-targeting framework and accelerate debt reduction efforts.<\><\>
\u201cWith inflation back to around 2%, Bank Al-Maghrib should continue its preparation to adopt an inflation-targeting framework,\u201d the IMF <\> stated<\><\> following its Article IV consultation mission to Morocco, conducted from January 27 to February 7.<\><\>
The country\u2019s inflation rate experienced a significant drop, falling from 6.1% in 2023 to 0.9% in 2024, according to Bank Al-Maghrib data. The central bank projects inflation to reach 2.4% this year.<\><\>
Roberto Cardarelli, who led the IMF mission, noted that \u201cthe current broadly neutral monetary policy stance is appropriate,\u201d adding that future policy rate changes should remain \u201cdata dependent.\u201d<\><\>
The IMF mission recalled Morocco\u2019s fiscal achievements, with <\> tax reforms<\><\> enabling higher-than-expected revenue and reducing the fiscal deficit to 4.1% of GDP in 2024, slightly better than the 4.3% target announced in the 2024 Budget.<\><\>\>\> \>\> \> \>\> \>\> \>\> \>\> \> \>\>
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Morocco World
3 days ago
- Morocco World
Ageing Population: What You Should Know About Morocco's Demographic Shift
Rabat – Like many countries across the world, Morocco is facing a significant demographic shift due to an ageing population , a decline in birth rates, and other related, notable social and economic implications. The country's latest census, conducted last year, suggests that Morocco is home to over 37 million people, with the average household size decreasing from 4.6 to 3.9 persons between 2014 and 2024 at the national level. One notable highlight is how Morocco's population structure has witnessed profound shifts that have reshaped the demographic pyramid. Growing ageing population The latest census of Morocco shows that the number of Moroccans aged under 15 declined from 28.2% in 2014 to 26.5% in 2024. The proportion of the working age population between 15 and 59 years also dropped from 62.4% to 59.7%. Meanwhile, the senior population, those aged 60 and over, rose from 9.4% in 2014 to 13.8% in 2024. This means that the number of people aged 60 and above reached around 5 million, compared to 3.2 million in 2014. The number shows an annual growth rate of 4.6%, outpacing the overall population growth of 0.85% — reflecting the accelerated pace of population aging and a remarkable shift in the country's demographic structure. Half or more of Morocco's senior population , which stands at 58.8%, is under the age of 70. Those aged 70 to 79 account for 28.3% of the national population. Those aged 80 and above make up 12.9% of the population, and by 2050, this age group is expected to represent 23.2% of the total population, or about 10 million people. Taking gender into perspective, statistics show that there were approximately 2.3 million elderly women in 2022. The number was 100,000 more than that of elderly men in the same age group. Experts expect the gap to widen in the coming years, with the number of elderly women reaching 5.4 million by 2050, about 770,000 more than men. Some of the main factors behind this change are the higher life expectancy at birth for women, compared to men. Official statistics from the Moroccan government attribute the situation to social and economic changes, including the integration of women into the labor market, which placed 'new pressures on the traditional model of family solidarity.' While it may appear normal to have people with gray hair across Morocco, many reports highlighted how an ageing population could affect a country. According to the International Monetary Fund, richer countries with populations getting older face GDP growth slowdown, and pressure on government budgets. 'An aging population and slower labor force growth affect economies in many ways — the growth of GDP slows, working-age people pay more to support the elderly, and public budgets strain under the burden of the higher total cost of health and retirement programs for old people,' IMF said in a report posted in 2017. This shift toward an ageing population comes amid a layer of complexity, compounding existing challenges, including high youth unemployment, socio-economic inequalities, and related social dysfunctions. The latest statistics from the High Commission for Planning (HCP) in November last year show that the national unemployment rate climbed to 13.6%, with rural areas experiencing an increase from 7% to 7.4% while the urban area rate held at 17%. Beyond employment, this deepening demographic shift comes amid inadequate healthcare services, a shortage of doctors, and under-equipped medical facilities – a situation that raises urgent questions on how the country is set to care for its growing elderly population. One challenge piling onto another A recent report by the Economic, Social, and Environmental Council (CESE) indicates that one in four Moroccans is without medical insurance. King Mohammed VI has urged the government to ensure the implementation of a universal social security system, benefiting all categories in Morocco. In line with this royal directive, the government has in recent years repeatedly pledged to efforts to expand social protection to all workers and vulnerable populations In January this year, the House of Representatives introduced legislation proposing reforms to the country's social security system. The changes cover the National Social Security Fund, also known as CNSS, authorizing it to manage social protection programs through frameworks or conventions and to also handle escalating debt concerns. However, both recent media reports and official statements have pointed to the persistence of the challenges that have long affected the health sector, including the situation of the elderly. In 2015, the Global AgeWatch Index ranked Morocco 84th out of 96 in an index that ranks countries based on the social and economic well-being of people over 60, taking into account indicators, including income security, health status, capability, and enabling environment. Among the socio-economic crises that also prevail is immigration. The Moroccan Ministry of Solidarity and Social Integration has made several pledges to improve social care institutions for the elderly. Placing elderly people in care centers is not a common practice in Morocco. But many seniors are increasingly ending up there, either because of their personal choice or because they are homeless or abandoned. The ministry views social care centers for the elderly as important, as they provide reception, shelter, food, medical care, and social support. Data from the ministry indicate that the number of social care institutions for the elderly in 2021 totalled 70, including 59 licensed institutions distributed across Morocco. The beneficiaries of the centers reached 5,794 elderly people, including 2,610 women, according to a 2019 assessment from the same source. Who will take over the ageing population? Amid the challenging situation, one of the most pressing socio-economic challenges facing Morocco is emigration. A significant number of youth are dreaming of leaving in search of a better life. While some turn to education as an opportunity to unlock emigration days for them, others throw themselves into the sea in hopes of reaching Spain or at least its nearby enclaves, from where they can reach a larger European corridor. The exodus creates a worrying imbalance as more youth leave, with questions raised on who will care for the growing elderly population left behind. A recent poll from the Afrobarometer survey in May shows that more than one-quarter of Moroccans think about leaving their homeland. The survey further shows that 26.8% of participants have considered leaving the country to varying degrees. This comes amid a drop in fertility rate and an increase in mortality rate in Morocco. In 2024, the country's fertility rate stood at 2.28, a 0.8% decline compared to 2023. In addition to this, Morocco faces issues with maternal and infant mortality, which remain high despite government efforts. In May, the World Bank said that despite the commendable progress, important gaps remain between rural and urban areas. 'Out of 100,000 live births in 2018, 111 mothers died in rural areas compared with 45 in urban areas,' the World Bank said, noting that there were also 26 deaths per 1,000 births in rural areas compared with 19 in urban areas. Health Minister Amine Tahraoui emphasized Morocco's efforts in January, noting a 70% reduction in the natural mortality rate over the past two decades. Morocco's maternal mortality rate dropped from 244 deaths per 100,000 live births in 2000 to 72 deaths by 2020, he said. Tags: Census 2024FertilityMoroccan Population
Morocco World
30-05-2025
- Morocco World
Moroccan Expatriates and the Floating Dirham: Risks, Confidence, and Currency Reform
As Morocco approaches its planned transition to a floating exchange rate regime in 2026, the financial participation and confidence of Moroccan expatriates will play a critical role in ensuring the reform's success. With more than five million Moroccans living abroad and remittances reaching over MAD 117.7 billion (approximately $11.7 billion) in 2024, this community represents both a stabilising force and a key stakeholder in the country's economic future. In this fourth article of the series, Oualid El Meriague speaks with financial expert Mr Badr Bouarich to explore how the dirham's floating may affect expatriate savings, remittances, and property investments. Bouarich provides critical insights into how Morocco can safeguard these contributions and foster deeper economic links with its diaspora during this pivotal shift. A Strategic Reform with Lessons from Abroad Transitioning from a fixed exchange rate regime to a floating one can be a complex undertaking. While some countries have managed the shift smoothly, others have struggled, if not outright failed. It is therefore essential to understand the chain of events that typically precede the decision to float a currency and to distinguish between voluntary transitions and those driven by crisis. A proper assessment must also consider both microeconomic and macroeconomic indicators. In Morocco's case, stakeholders led by Bank Al-Maghrib have opted for a voluntary, smooth, flexible, and gradual approach to the transition. During the COVID-19 pandemic in 2020, the process was temporarily paused to avoid unnecessary risks amid uncertainty. This decision reflected Morocco's ability to pace the reform with caution and foresight, unlike other nations that have had no such luxury. Some countries simply did not have the time or space to adjust or refine their approach. Egypt, for example, faced severe economic and institutional challenges following the Arab Spring in 2011. Political instability, security threats, especially in the Sinai, and a wave of terrorist incidents crippled tourism, which plummeted from 13 million visitors in 2010 to just 3 million in 2017. As a result, foreign currency inflows dwindled dramatically. The country's foreign currency reserves, which stood at around $36 billion in early 2011, dropped to $18 billion within the same year. By 2016, they remained dangerously low, covering less than three months of imports, well below the safe threshold. This made the float of the Egyptian pound in 2016 less a matter of economic reform and more a response to unsustainable pressure. The decision was not voluntary but rather forced by external constraints and mounting economic distress. Nigeria also went through several episodes of currency floating between 2016 and 2023. Initially, the move aimed to reduce pressure on foreign reserves, counter the black market, and attract foreign investment, particularly after oil revenue declines significantly reduced forex inflows. However, the policy produced mixed results. Inflation was already high, hovering around 16 percent, when the float was implemented. The government simultaneously removed fuel subsidies, which worsened the cost of living. The naira had long been overvalued at the official rate and therefore depreciated sharply once floated. Foreign exchange restrictions remained in place, leading to a semi-managed rather than truly free float. The black market persisted, and investor sentiment remained weak, deterring the very capital inflows the policy had aimed to attract. Following a full liberalisation of the naira in 2023, however, Nigeria has begun to see more promising results. Although inflation remains elevated, the black market is shrinking, exports are gaining competitiveness, and foreign exchange reserves are showing early signs of recovery. Economic growth is also beginning to pick up again. In contrast, Morocco's context is fundamentally different. Inflation remains contained at approximately 1.8 percent as of December 2024. The black market for foreign currency is almost non-existent despite ongoing capital controls, and reserves are stable at around MAD 375.2 billion (approximately $37 billion). Tourism reached record levels in 2024, with 17.5 million visitors and revenues exceeding MAD 105 billion. Institutions are resilient, and security concerns are being addressed swiftly and effectively. All signs suggest that Morocco is approaching this reform from a position of strength rather than necessity. This is an important distinction that should not be underestimated. Inflation and Timing: A Lesson from Egypt Egypt's inflationary troubles were well established even before it floated its currency. Chronic dependence on imports, rising global commodity prices, weak foreign currency inflows, persistent budget deficits, and expansionary monetary policy all contributed to an inflation rate of around 14 percent. In this fragile environment, the floating of the pound acted as an accelerant. Inflation surged to over 20 percent by the end of 2016 and approached 30 percent in 2017. This experience demonstrates that while floating a currency is not inherently inflationary, it can magnify inflationary pressures if underlying economic fundamentals are misaligned. Floating in an environment already burdened by high inflation can lead to severe socio-economic consequences. In Morocco's case, the floating is not driven by crisis. It is a voluntary reform rather than a reaction to external shocks or reserve depletion. As such, Morocco retains the ability to choose the right moment for implementation, an opportunity few other countries have had. In fact, we recall that Bank Al-Maghrib Governor Abdellatif Jouahri postponed the transition in 2020, citing uncertainty linked to the pandemic as justification. This strategic delay underscores Morocco's commitment to responsible economic management. To reduce the risks associated with the float, Morocco must carefully time the move. Ideally, this would occur during a period of low inflation, stable commodity prices, and manageable external conditions. Not all risks are foreseeable, however. Should a geopolitical shock, such as an escalation between Russia and Europe, occur, it could drive global energy and food prices sharply upwards, undermining even the best-laid plans. Global developments must therefore remain closely monitored. As discussed in earlier articles of this series, local mitigation strategies should also be reinforced. Encouraging distributors to hedge against currency volatility, while capping excessive profit margins, can help stabilize prices for essential goods and protect vulnerable consumers from sudden spikes in living costs. Capital Controls, Black Markets, and Currency Confidence According to official statements from Bank Al-Maghrib, Morocco's transition to a floating exchange rate will not entail the full liberalisation of capital flows. That is, limits will still apply to the amount of foreign currency individuals and corporations can legally exchange or transfer abroad. These long-standing restrictions are intended to shield the dirham from speculative attacks and to uphold financial stability during the transition. However, as evidenced by Nigeria's experience, foreign exchange controls can create distortions if not managed carefully. In countries where the official exchange rate is perceived to be misaligned with reality, black markets often emerge as a parallel mechanism to meet unmet demand. Though informal, these markets can serve as useful indicators of the currency's perceived value. In Egypt, prior to the 2016 float, the pound was trading at a 50 percent discount on the black market, precisely the level at which the official rate settled post-float. This demonstrates how informal markets often foreshadow formal adjustments. In Morocco's case, however, such distortions are currently minimal. Thanks to measures like raising the annual foreign exchange allowance for travel to MAD 100,000, the demand for black market transactions has largely disappeared. This suggests that the dirham's current value is broadly in line with market expectations and that public confidence in the currency remains intact. Moroccan Expatriates: A Stabilising Force in Transition Moroccan expatriates are a central pillar of the country's economic resilience. In 2024, remittances from the diaspora reached MAD 117.7 billion (approximately $11.7 billion), representing more than 8 percent of Morocco's GDP, which was estimated at MAD 1.43 trillion (or around $142 billion). These funds support millions of families and serve as a crucial source of foreign currency, helping Morocco maintain external balances and reserve buffers. Beyond the numbers, they also represent trust: trust that the Moroccan economy will remain stable and welcoming to those who live beyond its borders. If the floating of the dirham is not properly timed or communicated, expatriates may become wary of holding dirham-denominated savings. In the worst-case scenario, capital flight or a shift to informal channels could erode trust in the banking system. However, with the right hedging tools, accessible foreign currency products, and a clear reform roadmap, Moroccan financial institutions can ensure that expatriates feel secure and remain active participants in the national economy. Looking Ahead: Regional Influence Through Currency Reform In the next and final part of this series, we will examine how the flotation of the dirham could serve not only as a catalyst for trade and investment but also as a strategic lever for Morocco to strengthen its regional economic leadership. As capital mobility, investor sentiment, and market integration evolve, we will explore how Morocco can position the dirham, and by extension its broader economic model, as a stable and credible reference point in North and West Africa. This final analysis will provide a forward-looking view on how currency flexibility could enhance Morocco's role as a financial, commercial, and policy anchor in a more interconnected and competitive global system.
Ya Biladi
22-05-2025
- Ya Biladi
US eyes investment In Nigeria-Morocco gas pipeline
The United States has shown strong interest in the gas pipeline project linking Morocco to Nigeria, according to media reports from Abuja. The Trump administration is showing «interest in investing in the Nigeria-Morocco Gas Pipeline (NMGP) project», said Nigeria's Minister of Finance and Economy, Wale Edun, during a press conference. This week, the minister visited Washington to attend the 2025 Spring Meetings of the International Monetary Fund and the World Bank. His Moroccan counterpart, Nadia Fettah Alaoui, also participated in the gatherings. The project enjoys the backing of Nigeria's federal government, in contrast to the difficulties faced by the Nigeria-Niger-Algeria pipeline, which has been hampered by crises in the Sahel and strained relations between Abuja and Niamey, and more recently between Niamey and Algiers. As a reminder, Amina Benkhadra, Director General of the National Office of Hydrocarbons and Mines (ONHYM), presented the significant progress of the West African Gas Pipeline (WAGP) on March 6 in Washington. Her presentation took place during an event organized by an American think tank on the sidelines of the «Powering Africa Summit», which focused on energy partnerships between the United States and Africa.
