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IMF: Diversified Economy in Morocco, Better Resisted Financial Crisis

Global Arab Network - - George Haddad

Wednesday, 12 May 2010 21:22

IMF: Diversified Economy in Morocco, Better Resisted Financial Crisis

Morocco - Thanks to its diversified economy, Morocco has better resisted the global financial crisis, IMF managing director Dominique Strauss-Kahn said.

"Countries with diversified economies, such as Morocco, have better resisted (the global financial crisis) and could have a strong rate of growth," Strauss-Kahn said in an interview published on Wednesday by the Egyptian newspaper Al Ahram Hebdo.

"Morocco is a very good example. This country has successfully overcome the crisis. It will have a strong growth," he said.

Strauss-Kahn noted that one of the problems in some African countries and other parts of the world is "having an economy insufficiently diversified or completely energy-based."

The IMF boss mentioned some cases such as Nigeria, where the contribution to the GDP (excluding oil GDP) got less and less important in recent years and it is more difficult for the country to resist the crisis.

In this sense, he stressed the need for the integration of economies in the global market with a wide variety of products, underlining that he is “optimistic” for Africa after the global financial crisis.

“Overall, Africa has overcome the crisis better than expected. Now we notice in most countries a return to growth,” he said.

The economic recovery has begun in Europe, but it will be very slow and protracted. Unfortunately, even though we have begun to see signs of recovery, they are very tenuous. The impact on Morocco will be positive—in particular in terms of external demand—but very weak. In this context, IMF considers the policies announced by the Moroccan authorities to be well suited to the situation, in particular the 2010 budget, which anticipates a deficit of about 4.5 percent of GDP, an appropriate forecast given the situation.

In the short run, the financial sector remains very sound and its connections to the foreign financial markets remain limited.

In terms of macroeconomic stability, which Morocco attained a decade ago, the fiscal balance needs to be monitored and, the 2010 budget, which anticipates a budget deficit of 4.5 percent of GDP, is appropriate for today’s situation. However, in the medium term, the fiscal deficit should be gradually brought down to its past level of less than three percent of GDP. This would stabilize the public debt to GDP ratio and maintain a sound, solid, and stable macroeconomic situation.

The medium term always gives rise to the challenge of competitiveness, namely Morocco’s position vis-à-vis its competitors in the international goods and services markets, and the appropriate policies needed to face the challenges of such competition. Fiscal consolidation efforts are being sustained.

With respect to medium-term priorities, there is always a need to bolster human development in the country. In recent years, Morocco has made much progress in reducing poverty and in improving the unemployment situation and social services, but more can always be done to support education and health with a view to reducing poverty and unemployment.

Global Arab Network

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