Morocco: Request for an Arrangement Under the Flexible Credit Line-Press Release; Staff Report; and Statement by the Executive Director for Morocco

This paper presents Morocco’s Request for an Arrangement under the Flexible Credit Line (FCL). Morocco qualifies for the FCL by virtue of its very strong policies, institutional policy frameworks, and economic fundamentals and continued commitment to maintaining such policies in the future. Downside risks to the economic outlook remain elevated and stem primarily from the external environment and the impact of climate change. A greater-than-expected fallout from Russia’s war in Ukraine would lower external demand, increase commodity price volatility, and tighten external financial conditions. Morocco’s very strong macroeconomic policies and institutional framework have allowed its economy to remain resilient to the multiple negative shocks that have occurred over the past three years, including the pandemic, two droughts, and the spillovers from Russia’s war in Ukraine. The arrangement will enhance Morocco’s external buffers and provide insurance against plausible tail risks on a temporary basis. The authorities stated their intention to treat the arrangement as precautionary.