Morocco’s central bank (Bank Al-Maghrib-BAM) has rejected an IMF proposal to make the national currency’s exchange rate more flexible, bank governor Abdellatif Jouahri said in a televised interview on Tuesday (October 18).
“The reforms can't take place while the country is battling with economic crises that are exerting significant pressure on the state budget and the economy as a whole,” the BAM governor told SkyNews Arabic.
Nearly 90% of the Moroccan economy is made up by very small businesses, which are not prepared to stand the implications of any further exchange rate fiscal reforms, Jouahri said.
The North African country first abolished its fixed currency exchange rate for the dirham to a more flexible ±2.5% rate in 2018 in a bid to liberalize the economy and enrich openness, but under risks of fluctuating demand and supply pressures. The first move to make the exchange rate currency more flexible was in Morocco’s favour which is not the case now, Jouahri explained.
The IMF proposal was part of its recommendation for Morocco’s transition to the next phase of fiscal reforms. The Fund argued that a more flexible exchange rate will help the Moroccan economy to preserve reserve buffers and competitiveness, as the economy will be better positioned to absorb external shocks.