Morocco: Second Review Under The Arrangement Under the Resilience and Sustainability Facility-Press Release; Staff Report; and Statement by the Executive Director for Morocco

While agricultural output suffers from yet another drought, non-agricultural output has remained robust, and domestic demand is strengthening. Nonetheless, unemployment has increased. Inflationary pressures have abated, allowing BAM to cut the policy rate in June 2024. The fiscal deficit is on track to meet the 2024 budget target, with stronger-than-expected revenues offset by increased current spending. Strong revenues from tourism, exports of goods, and remittances have kept the current account deficit to low levels. Morocco continues to make progress in bolstering its resilience against climate change and seizing the opportunities from decarbonization, under the RSF arrangement. Significant investments in water infrastructure aim at addressing water scarcity and will need to be complemented by demand management reforms. Continued progress toward liberalizing the electricity markets, a key dimension of the RSF, is needed to boost private sector participation in renewable energies (RE). This will not only help Morocco achieve its NDC targets but would also reduce its reliance on imported fuels, improve firms’ competitiveness, and help create jobs.