IMF Concludes Article IV Consultations with Morocco: Economic Outlook and Recommendations
Overview of Consultations
Between January 29 and February 11, 2026, a delegation from the International Monetary Fund (IMF), headed by Laura Jaramillo, held discussions with Moroccan officials as part of the Article IV consultations for the year.
Economic Growth Projections
Jaramillo reported that Morocco's economic growth in 2025 was estimated at 4.9%, driven by strong performance in the agricultural and construction sectors, alongside services. This growth momentum is expected to continue into 2026, with a projected growth rate of 4.9%, bolstered by both public and private investment and robust agricultural output due to exceptional rainfall.
Inflation and Current Account Deficit
Overall inflation averaged 0.8% in 2025, reflecting low food inflation, and is anticipated to gradually rise to around 2% by mid-2027. This increase is expected to be influenced by previous cuts in the key interest rate and a strengthening growth dynamic.
Despite an increase in tourism revenues, the current account deficit is projected to widen moderately, primarily due to the significant import component associated with increased public investment. This deficit is expected to be partially financed by rising foreign direct investment (FDI). The level of international reserves remains adequate.
Fiscal Performance and Recommendations
Tax revenues reached 24.6% of GDP in 2025, marking a significant increase over the past two years, attributed to recent fiscal policy reforms and improved revenue management. The central government deficit decreased to 3.5% of GDP, down from the 3.8% projected in the 2025 budget.
However, part of the revenue overperformance was utilized to finance additional investments and transfers to public institutions and enterprises. It is advisable to reserve at least a portion of this surplus to further strengthen budgetary margins.
Investment in Human Capital
The mission emphasized the importance of reallocating spending to create room for increased investment in human capital. Access to education, healthcare, and social protection for vulnerable populations continues to improve, and the IMF encourages the acceleration of ongoing reforms in these sectors.
Maximizing the opportunities presented by increased public investment requires careful risk management, including fiscal and economic risks, alongside enhanced investment in human capital, particularly in health and education.
Strengthening the Budgetary Framework
The IMF team commended Morocco's progress in strengthening the medium-term budgetary framework (MTBF) and managing public investment, particularly efforts to adopt a new budgetary rule. Continued efforts are necessary to systematically identify, quantify, and monitor budgetary risks, especially those related to public institutions and enterprises.
Monetary Policy and Financial Sector Resilience
With inflation well-controlled, the overall neutral stance of monetary policy remains appropriate and should continue to rely on available data. The mission encourages Bank Al-Maghrib to advance its transition towards greater exchange rate flexibility as it moves towards inflation targeting, ensuring clear communication regarding the timeline and prioritization of economic policy objectives.
The team also praised the carefully sequenced reforms aimed at addressing non-performing loans and recommended ongoing efforts to bolster the resilience of the financial system against emerging risks.
Challenges in Job Creation
Creating sustainable jobs remains a significant challenge that necessitates reforms to foster a more dynamic private sector and improve labor market responsiveness. In this context, accelerating reforms of public institutions and enterprises to enhance their performance and governance is crucial for increasing competition and ensuring a level playing field between public and private entities.
The mission welcomed the more targeted financial and technical support for small and medium-sized enterprises (SMEs) through the Investment Charter, regional investment centers, and the Mohammed VI Investment Fund, as well as the new SME Charter, and encouraged close monitoring of employment outcomes.
Continued Commitment to Employment Initiatives
The ongoing implementation of the '2030 Employment Roadmap' provides a comprehensive framework for reducing unemployment through modernized active labor market policies and enhanced support for unqualified youth. The mission encourages complementary measures to address skill mismatches.
Engagement with Moroccan Authorities
The IMF team engaged in discussions with senior officials from the Moroccan government, Bank Al-Maghrib, and representatives from both the public and private sectors. The team expressed gratitude to the Moroccan authorities and other stakeholders for their warm hospitality and constructive exchanges.
