RABAT (Reuters) -Morocco’s central bank left its benchmark interest rate at a record low of 1.5% on Tuesday, saying its accommodative monetary policy was necessary to spur economic growth and that inflation would ease next year.
Driven by food and energy prices, inflation is expected to reach 5% this year before coming down to 2% in 2023, the central bank said in a statement following its quarterly board meeting.
Economic growth is seen slowing to 1% this year from 7.9% in 2021 because of drought, before improving to 4% in 2023.
The drought has depressed Morocco’s cereals harvest this year by 69% to 3.2 million tonnes, according to agriculture ministry forecasts.
As imports continue to outweigh exports, the current account deficit will expand to 4.9% of gross domestic product in 2022, from 2.3% last year, before narrowing to 3.8% in 2023, the bank said.
It said Morocco’s foreign exchange reserves will total 342.5 billion dirhams ($34.3 bln) this year – enough to cover six months of imports- and rise to 346.4 billion dirhams next year, thanks to rising exports and tourism revenue.
Morocco may issue an international bond to raise $1 billion, central bank governor Abdellatif Jouahri said.
Morocco was also seeking a new credit line from the International Monetary Fund, he said.
Monetary tightening in the United States and the euro zone “will weigh on Morocco’s financial balances,” and conditions for tapping the international bond market, he said.
The government has budgeted 40 billion dirhams in external borrowing this year, with a large chunk to be raised from multilateral creditors.
Total government debt is expected to rise to 70.1% of GDP in 2022, from 68.9% last year, while the fiscal deficit is seen steady at 6.3% of GDP, with higher tax revenues expected to offset a surge in subsidies, the bank said.
(Reporting by Ahmed Eljechtimi; Editing by Frank Jack Daniel, Mark Heinrich and Tomasz Janowski)
