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On March 20, the Executive Board of the International Monetary Fund (IMF) concluded its 2026 Article IV consultations with Morocco and completed the mid-term review under the Flexible Credit Line (FCL) arrangement approved on April 2, 2025.
In a statement, the IMF said Morocco’s real GDP growth is estimated to have accelerated to 4.9% in 2025, driven by a rebound in agricultural output and a surge in large-scale infrastructure projects. However, high unemployment remains a key challenge.
Inflation remained low, averaging 0.8%, allowing Bank Al-Maghrib to maintain a neutral monetary policy stance following earlier interest rate cuts. Meanwhile, the current account deficit widened to 2.1% of GDP, reflecting higher imports linked to investment projects, partly offset by strong tourism revenues.
Robust revenue performance helped reduce the overall fiscal deficit to 3.5% of GDP, lower than expected, despite higher-than-budgeted public investment and increased transfers to state-owned enterprises.
Looking ahead, the IMF said growth prospects remain strong, supported by solid domestic drivers. Real GDP growth is projected at 4.4% in 2026, 4.5% in 2027, and around 4% in the medium term, assuming a normalization of agricultural production and continued infrastructure investment with greater private sector participation.
Impact of Middle East tensions
The Fund warned that short-term growth prospects are being weighed down by the ongoing conflict in the Middle East, which affects Morocco through disruptions in global commodity markets and weaker external demand amid heightened uncertainty. Inflation is expected to rise temporarily due to higher energy prices before stabilizing at around 2% over the medium term.
The current account deficit is projected to widen modestly, given the high import content of infrastructure investments and rising commodity costs. International reserves are expected to remain at adequate levels, while fiscal consolidation is set to continue, with the debt-to-GDP ratio projected to decline gradually to 60.5% by 2031.
External risks include increased volatility in commodity prices, persistent global uncertainty linked to the Middle East conflict, and potential trade barriers or supply chain disruptions that could affect activity in the Eurozone.
Domestically, risks relate to potentially lower-than-expected returns from public infrastructure investments, which could weigh on growth and employment. In such a scenario, available policy space, along with the Flexible Credit Line, would help cushion the impact.
Kenji Okamura, IMF Deputy Managing Director and Acting Chair, said Morocco remains «eligible to benefit from the Flexible Credit Line arrangement», highlighting the country’s «very strong macroeconomic policies» and «extremely solid economic fundamentals and institutional frameworks».
He added that the authorities intend to continue treating the FCL as precautionary and to gradually exit the arrangement depending on the evolution of external risks.
