Morocco Currency Move a Step in Right Direction

Morocco’s new, more flexible hard currency system is a step in the right direction to make the kingdom more attractive to investment and turn it into a financial hub for Africa, a senior IMF official said late Monday.

Two weeks ago, Morocco launched a more flexible foreign exchange system under free-market reforms recommended by the International Monetary Fund to protect the North African economy against external shocks and safeguard its reserves, Reuters reported.

“It’s a reform that goes in the right direction,” Jihad Azour, director of the IMF Middle East and Central Asia department, told Reuters on the sidelines of an economic conference in Marrakech in Morocco.

“It allows Morocco to be ... more attractive for investors and to play its full role as regional financial center, especially with the ambition of Morocco to service Africa in terms of financial services,” he said.

Rabat has said it does not plan to follow the path of Egypt, which opted for a full float of its currency in one go. “I think the path of their reform has been designed with ... our support. We were very much satisfied with the way they did it,” Azour said when asked whether Morocco should undertake more currency reform.

He said Rabat’s abolition of most fuel subsidies and other market reforms had allowed Morocco to bolster economic growth, which was forecast at 4.5% for last year.

Growth in 2018 will also be positive, he said. Morocco has forecast GDP growth to slow to 2.8% this year though officials have said the currency move could add 0.2%.

Morocco is among the most advanced Arab countries in liberalizing its economy, he said. “They are on the right track. This is paying off.”