Fitch Ratings maintains its ‘BB+’ sovereign rating for Morocco

American agency Fitch Ratings confirmed on Wednesday Morocco's long-term default foreign currency issuer rating at ‘BB+’, with a stable outlook. «Morocco's 'BB+' rating is underpinned by a record of macroeconomic stability reflected in relatively low inflation and GDP volatility pre-pandemic, a moderate share of foreign-currency (FC) debt in total general government (GG) debt, and relatively comfortable external liquidity buffers», the agency explains in a press release.

The Kingdom’s assets are balanced against «weak development and governance indicators» such as a high government debt and budget and current account deficits «that are wider than rating peers», adds the same source. «The central government (CG) budget deficit rose to 7.7% of GDP in 2020, from 4.1% in 2019 (excluding privatization proceeds)», explains the agency. Lockdown measures due to the Covid-19 pandemic as well as the declining global demand have caused a sharp drop in revenue while current spending has increased to mitigate the impact on health and cushion the financial cost on consumers and companies, Fitch recalls.

To the agency, «plans to improve the delivery of social services and expand social benefits alongside an only modest recovery in tax revenue, lower grants and continued spending pressures from the pandemic will keep the CG deficit at 7.1% of GDP in 2021 and 5.8% in 2022». The same source also predicts that the prolonged pandemic shock would result in a worsening of the financial vulnerabilities of some state-owned enterprises. As for domestic demand, it is considered that imports would rebound as said demand would begin to recover.

For the record, Fitch Ratings lowered Morocco's sovereign rating in October 2020, from ‘BBB-‘ to ‘BB+’, with a stable outlook.