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American credit rating agency Fitch Ratings has downgraded Morocco’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to 'BB+' from 'BBB-' with a stable outlook.
The downgrade, published Friday, shows the «severe impact of the coronavirus pandemic on Morocco's economy and public and external finances», Fitch Ratings explained.
«A fall in fiscal revenues and an historically large GDP contraction will prompt a sizeable rise in government debt, while the hit to manufacturing and tourism will cause a significant worsening in the current account deficit and net external debt from already high levels», the rating agency added.
In addition to its rating, the American agency expects Morocco’s fiscal deficit to deteriorate. «We forecast the central government (CG) deficit to widen to 7.9% of GDP from 4.1% in 2019», is experts wrote.
«We estimate the general government (GG) deficit, which also includes social security, local governments and extra-budgetary units, will widen to 7.3% of GDP in 2020 from 2.8% in 2019, compared with forecast 'BBB' and 'BB' medians of 7.1% and 7.8% respectively».
Fitch Ratings’ downgrade comes as the agency announced in April that it is holding the BBB- rating for Morocco with a negative outlook.
