Morocco’s rating raised on low debt


Standard and Poor’s raised Morocco’s foreign and local currency ratings one notch, saying that by reducing its debt the Moroccan government had given itself more flexibility in economic policy.

The agency said in a statement it had raised Morocco’s long-term foreign currency sovereign credit rating to ‘BBB-‘ from ‘BB+’, and its long-term local currency sovereign credit rating to ‘BBB+’ from ‘BBB’.
“The upgrade reflects our view of the Moroccan government’s improved economic policy flexibility as a result of its track record in reducing the country’s fiscal and external debt burdens over the past decade,” said Standard & Poor’s credit analyst Veronique Paillat-Chayrigues.

Morocco’s government says that its reforms over the past decade allowed it to deal more easily with the impact of the global slowdowm on the country’s economy.

Economic Affairs Minister Nizar Baraka told Reuters in an interview last month that Morocco would maintain annual economic growth averaging 5 percent until 2012 on new stimulus plans.

Morocco posted the highest growth rate in the Middle East and North Africa region in 2008 with 5.6 % expansion. That slipped to 5.1 % in 2009 as the country’s non-farming gross domestic product slowed due to the global crisis.

Weak social indicators

Standard & Poor’s said the outlook on Morocco’s long-term ratings was stable. It said that outlook balanced progress in modernising the economy and strengthening public finances against the weaknesses of its economic structure.

Further improvements in Morocco’s credit-standing would likely follow a more rapid convergence of living standards with those of other ‘BBB’ rated sovereigns, the ratings agency said.
“We also factor in the high political stability and the government’s momentum for its reform programme, including large public works, which has raised Morocco’s trend growth prospects, and contributed to improving gradually the country’s still weak social indicators,” said Paillat-Chayrigues.

Morocco’s government has increased spending on basic infrastructure to 400 billion Moroccan dirhams ($48.20 billion) for the 2008-2012 period from 80 billion in the previous period.

That investment aims to upgrade basic infrastructure including the highway network, power grids, ports and airports, the farming sector and telecoms.

Pic: Flag of Morocco