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Report on Morocco's Balance of Payments between “(2017

to 2023):

Introduction:

Morocco's Balance of Payments (BOP) provides a comprehensive

overview of the country's economic interactions with the rest of the
world. Analyzing its trends over the period 2017-2023, drawing insights
from various banks, will paint a multifaceted picture of Morocco's
economic stability, external vulnerabilities, and growth potential. This
report aims to achieve the following:

Currency Moroccan dirham (MAD)

Fiscal year Calendar year

Trade AU, AfCFTA (signed), WTO, AMU, CAEU, ECOWAS

organizations

Country  Developing/Emerging
group  Lower-middle income economy

Morocco Balance of Payments (BoP): Current Account (CA) data was

reported at -7,898.000 MAD mn in Jun 2023. This records a decrease
from the previous number of 481.000 MAD mn for Mar 2023.
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Morocco Current Account recorded a deficit of 781.5 USD mn in Jun

2023, compared with a surplus of 46.7 USD mn in the previous quarter.
Morocco Current Account Balance: USD mn data is updated quarterly,
available from Mar 2014 to Jun 2023, with an averaged value of -
925.6 USD mn.

World Bank:

Current Account: Highlights the impact of tourism on the deficit,

noting its significant decline during the pandemic and subsequent
rebound.
Capital Account: Focuses on the government's role in attracting FDI,
particularly through infrastructure projects and renewable energy
initiatives.
Financial Account: Cautions about rising external debt and advocates
for fiscal consolidation measure.

Report on Morocco's Balance of Payments of World bank.

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Statistics of Morroco
Population 37,112,085 (2020)[3]
GDP  $139 billion (nominal, 2023)[4]
 $387 billion (PPP, 2023)[4]
GDP rank  61st (nominal, 2023)
 56th (PPP, 2023)

GDP  1.1% (2022)[4]

growth  3.0% (2023)[4]
 3.1% (2024)[4]
GDP per  $3,700 (nominal, 2023)[4]
capita  $10,500 (PPP, 2023)[4]
GDP per  127th (nominal, 2023)
capita rank 122nd (PPP, 2023)
GDP by  agriculture: 14.8%
sector  industry: 29.1%
 services: 56.%
 (2017 est.)
Inflation (C 4.6% (2023)[4]
PI)
Population  4.8% (2013)[5]
below pover 10% on less than $3.65/day (2013)[6]
ty line
Gini 39.5 medium (2013)[7]
coefficient
Human  0.683 medium (2021)[8] (123rd)
Developmen 0.504 low IHDI (2021)[9]
t Index
Labor force 12,047,196 (2019)[10]
 42.2% employment rate (2016)[11]
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Labor force Agriculture: 39.1%

by  Industry: 20.3%
occupation  Services: 40.5%
 (2014)

Unemploym 10% (2017)[12]

ent
Main Phosphates, rock mining and processing, high
industries tech, food processing, leather goods, textiles, construction, touri
sm, automobile manufacturing

Examine the main components of Morocco's BOP: Current Account,

Capital Account, and Financial Account.
Analyze trends and fluctuations in these components over the seven-year
period.
Compare and contrast data and interpretations from different banks, such
as the World Bank, International Monetary Fund (IMF), Bank of Africa,
and Attijarwafa Bank.
Identify key drivers of these trends and assess their impact on Morocco's
economic outlook.
Provide recommendations for policymakers to bolster Morocco's
external balance and support sustainable growth.
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Current Account:

The Current Account reflects the difference between Morocco's exports

and imports of goods and services, as well as income received and paid
from abroad. It is crucial for assessing the country's trade
competitiveness and dependence on external resources.

Trend:
The Current Account deficit averaged -4.4% of GDP between 2017 and
2023, with significant variations. The deficit widened to -9.8% in 2022
due to rising energy and food import costs amidst the global crisis.

The following table shows the main economic indicators in 2017 –2022.
Inflation below 5% is in green.

GDP GDP per GDP Inflation Unemployment Government

Year (in bn. capita growth rate (in Percent) debt
US$PPP) (in US$ (real) (in (in % of GDP)
PPP) Percent)
285.6 8,193 5.1% 0.7% 10.6% 60.3%
2017

2018 301.3 8,556 3.1% 1.6% 9.4% 60.5%

2019 315.6 8,868 2.9% 0.2% 10.2% 60.3%
2020 296.4 8,245 - 0.6% 12.2% 72.2%
7.2%
2021 333.2 9,177 7.9% 1.4% 11.9% 68.9%
2022 359.7 9,808 0.8% 6.2% 11.1% 70.3%
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Bank Comparisons:

While the World Bank and IMF agree on the general trend, Attijariwafa
Bank highlights the impact of tourism revenues, which fluctuated
heavily due to the pandemic. Bank of Africa emphasizes the growing
importance of remittances from Moroccans abroad, a vital source of
foreign currency.

Morocco has become an attractive destination for European investors

thanks to its relocation sites "Seashore" and "Rabat shore", and to the
very rapid cost escalation in Eastern Europe. The offshoring sector in
Morocco is of great importance as it creates high-level jobs that are
generally accompanied by an influx of Moroccan immigrants. Noting
however that human resources remain the major concern for companies
seeking to gain a foothold in Morocco. In this regard, it has been deemed
an important decision of the Moroccan government to accelerate training
in the required disciplines.
Unlike many central banks around the world, the Moroccan monetary
authorities decided to maintain their key rate unchanged at 1.5%.
Although inflation is accelerating, the surge is recent and relatively mild.
In 2021, consumer prices rose at an average annual rate of only 1.4%. In
February 2022, they were up 3.6% y/y and the situation will only get
worse given the pressures on global commodity markets and the drop-
off in national agricultural production.
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THE CENTRAL BANK HOLDS THE COURSE DESPITE

INFLATIONARY PRESSURES (04/12/2022 • By Stephan ALBY)
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Capital Account:

The Capital Account captures non-debt-creating capital flows, including

foreign direct investments (FDI) and portfolio investments. It indicates
the confidence of foreign investors in Morocco's economy and its
potential for generating returns.

Trend:
FDI remained relatively stable around 3% of GDP, with some upward
trends in 2021 and 2022, as highlighted by the World Bank. However,
portfolio investments were volatile, particularly during the pandemic and
global market uncertainties.
Bank Comparisons: The IMF emphasizes the role of government
policies in attracting FDI, while Bank of Africa focuses on the potential
of renewable energy and infrastructure projects to drive future
investments. Attijariwafa Bank underscores the need for diversifying
investment sources beyond Europe.

Financial Account:

The Financial Account records debt-creating capital flows, including

loans, bonds, and other debt instruments. It reflects Morocco's reliance
on external borrowing and its vulnerability to exchange rate fluctuations.
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Trend:
External debt reached 30.8% of GDP in 2023, according to the World
Bank. While rising, it remains below critical thresholds. However,
increasing reliance on borrowing raises concerns about future debt
sustainability.
* *Bank Comparisons:* The IMF warns of potential risks associated
with rising external debt and recommends fiscal consolidation measures.
Bank of Africa emphasizes the importance of diversifying debt sources
and promoting domestic bond markets. Attijariwafa Bank highlights the
need for prudent debt management and structural reforms to boost
economic growth and reduce reliance on borrowing.

Key Drivers and Economic Outlook:

Global economic shocks:

The COVID-19 pandemic and the ongoing Ukraine war significantly
impacted Morocco's trade and foreign investments. Increased
commodity prices contributed to the widening Current Account deficit.

Policy reforms:
Government efforts to improve business climate, attract FDI, and boost
tourism are crucial for improving the BOP.

Diversification:
Reducing dependence on imports, particularly for energy and food, is
essential for long-term stability. Diversifying exports and investment
sources will also strengthen resilience.
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Recommendations for Policymakers:

Implement fiscal consolidation measures to reduce budget deficits and

debt accumulation.
Pursue structural reforms to boost productivity, enhance
competitiveness, and attract foreign investments.
Diversify exports beyond traditional sectors and markets.
Promote domestic resource mobilization and reduce reliance on external
borrowing.
Invest in renewable energy and energy efficiency to lower import
dependence.
Develop and implement sound debt management strategies to mitigate
risks.

Conclusion:

By analyzing Morocco's BOP through the lens of different banks, we

gain a deeper understanding of the country's economic vulnerabilities
and potential. While challenges remain, Morocco has the potential to
achieve sustainable growth and improve its external balance by
implementing sound policies, diversifying its economy, and attracting
productive foreign investments.