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Covid-19 : Despite negative forecasts, remittances sent by Moroccans increase

According to the Foreign Exchange Office, remittances sent by Moroccans living abroad rose by 2.2% from January to the end of September 2020, thus resuming the upward trend after having suffered a sharp decline during the period of sanitary confinement. However, according to the World Bank’s projections, remittances to the Kingdom are expected to drop by 5% during the current year.

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At the end of September 2020, remittances sent by Moroccans living abroad reached 50.593 billion dirhams instead of 49.525 billion dirhams as recorded at the end of September 2019. According to data published by the Foreign Exchange Office, transfers increased by 2.2% (+1.068 billion dirhams) during said period.

This increase reflects the astonishing recovery that Moroccans’ remittances witnessed during said period. Compared to 2019, the total of remittances sent by Moroccans living abroad was at 4.411 billion dirhams in January and increased in February before starting to drop over the following six months.

The decrease went from 4.7% in March to 10.1% by the end of April. Then the gradual drop when from 12.4% at the end of May to 2.3% at the end of August.

After a tough summer, a recovery was observed during the month of September, rising from 43.434 billion dirhams at the end of August to 50.593 billion dirhams. Indeed, it recorded an increase of 2.2% compared to last year. 

However, this recovery is threatened by the situation in Europe, where the majority of Moroccans live. In several European countries, a second lockdown was imposed, which could affect the amount of remittances sent by Moroccans living there, as observed during the first lockdown in March and April.

For the moment, figures from the Foreign Exchange Office seem to contradict forecasts from the Ministry of Finance and the World Bank. Indeed, during the presentation of the main lines of the amending bill, Mohamed Benchaaboun said in July that the Kingdom expected a 20% drop in remittances.

In a briefing note on migration and development, the World Bank estimated last week that «remittances from migrant workers to their countries of origin are expected to decline by 14% by 2021 compared to pre-pandemic levels in 2019».

A drop of 5% for remittances to Morocco in 2020

A decline that the World Bank blames on «the sluggishness of economic growth, insufficient levels of employment in host countries, low oil prices and the depreciation of the countries' currencies».

The same source added that remittances to low- and middle-income countries are expected to decline globally to $ 508 billion in 2020, down by 7%, before experiencing another collapse in 2021, to $ 470 billion (-7.5%).

For the Middle East and North Africa (MENA) region, the World Bank expects a decline of around 8% in 2020 and 8% in 2021. «All major recipient countries of funds will likely experience a drop in remittances», the note continued.

In Morocco, the drop of remittances is expected to stand at 5%. A drop that remains less significant compared to Lebanon (-7%), Egypt (-9%), Jordan (-12%) and Tunisia (-15%). 

Morocco is also expected to remain in the top 3 of the main recipients of remittances in the region in 2020, with 6.4 billion dollars (5.7% of GDP), behind Egypt (24 , $ 4 billion) and Lebanon ($ 6.9 billion).

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