Morning – "Yes, But" by Fitch Ratings

The agency estimates that the government's announced target of reducing public debt to 60% of GDP by 2021 is unlikely.

Fitch Ratings confirms Morocco's rating of "BBB-" for its long-term currency and currency problems with stable outlook. Despite macroeconomic stability, the country remains penalized by the weakness of its governance and development indices, the high level of public debt and the double deficit.

Fitch Ratings confirms Morocco's investment grade. The International Credit Rating Agency maintains the "BBB-" standard issuer rating (standard issuer rating) for long-term issuance in foreign currencies as well as the local currency with a stable outlook. The short-term IDR "F3" and the state rating of the "BBB" ceiling are also confirmed. This rating reflects "historical" macroeconomic stability, a comfortable foreign country position and a small share of foreign currency debt in public debt. Good indicators offset by indicators of governance and development that remain weak. The country is also penalized by a high level of public debt and a current account and budget deficit. In this respect, the agency's experts point out that the government will lose its target of reducing the central government's fiscal deficit (CG) to 3% in 2018, after 3.6% of GDP in 2017. Expect this deficit to rise to 3.8 % Of GDP compared to a revised government estimate of 3.5%. This trend can be explained in particular by rising hydrocarbon prices, which will lead to 0.4% of GDP in relation to subsidies.
In addition, GFCC payments as well as corporation tax revenues would be lower than projected. In addition, despite significant investments in infrastructure and industrial capacity in recent years, "Morocco's non-agricultural activity has been unable to accelerate, and the growth rate of employment remains weak, resulting in only a slight improvement in social indicators."
According to the outlook, Fitch expects a stable deficit of 3.7% of GDP in 2019, which is expected to improve to 3.5% in 2020, mainly due to a decline in investment expenditure relative to GDP. The Agency also believes that the government's announced target of reducing public debt to 60% of GDP in 2021 is unlikely. According to her, public debt would reach 67.6% of GDP in 2020, while in 2017 it would be 65.1%.
"Public debt has risen from a low level in 2008 (45.4% of GDP), reflecting moderate growth and slow and disrupted progress in fiscal consolidation," warns Fitch.
In terms of growth, GDP is projected to increase on average by 3.2% in 2018-2020, according to the current average BBB of 3.3%. The current account deficit would be 4.2% of GDP on average in the years 2018-2020, compared with 3.6% in 2017 above the current average "BBB" of 1.6%. These projections reflect a larger trade deficit. Higher imports, especially industrial inputs, will be partly offset by export performance from phosphate and vehicle sales. Finally, with regard to foreign direct investment, it would average 1.7% of GDP in 2018-2020.

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