S&P Revises Morocco Outlook to Positive, Affirms Ratings at "B/BB+"

The credit rating agency, Standard & Poor's Global Ratings, affirmed Morocco's ratings at "B/BB+" on its long- and short-term debts in foreign and local currencies, while raising the outlook from "stable" to "positive."

Standard & Poor's emphasized in its evaluation report that Morocco has shown great resilience in the face of multiple crises during the last five years. It also maintained its ability to mobilize internal and external financing.

The agency added: “The positive future outlook reflects our expectations that Morocco will build on its results in implementing the social, economic and financial reforms it has undertaken recently, paving the way for achieving comprehensive growth and reducing the budget deficit.”

The agency believes that the gradual transformation in the structure of the economy will continue, enhancing the prospects for growth, economic stability and public finances. She also added that the Moroccan economy will also benefit from increasing Morocco's export capacity, as well as from developing major investment projects within the framework of organizing the African Cup of Nations in 2025 and the FIFA World Cup in 2030.

The agency also indicated that Morocco has undertaken a structural reform of the public enterprises and contracting sector, which would reduce the financial burden and potential risks to the budget, and establish a more suitable market for better development of the private sector.

Standard & Poor's also stated that Morocco benefited from the possibility of immediate recourse to the resources of the International Monetary Fund, especially through the flexible credit line, which enables it to obtain financial resources that can be resorted to when necessary.

The agency also pointed out that Morocco also benefited from funding within the framework of the Resilience and Sustainability Facility, which aims to support its efforts and enhance its ability to confront climate change.

In its assessment report, the agency stated that the level of debt volume is still higher than its pre-pandemic levels, but its structure remains sound. The level of exposure to risks associated with fluctuations in exchange rates, interest rates, and refinancing remains relatively limited.

The agency added that the external debt ratio, which represents less than a quarter of the total treasury debt, is mainly accompanied by easy conditions. International bond issues, with a fairly flexible repayment schedule, also account for about a third of total external debt.

According to the agency, measures aimed at encouraging investment give priority to the water and energy sectors. S&P also highlighted the measures taken by the government to alleviate water scarcity and improve water consumption efficiency (building new dams, desalination and recycling plants).

The agency expects a gradual rise in foreign direct investment flows over the coming years, in parallel with structural economic reforms that enhance Morocco's attractiveness to investors, as well as access to the International Monetary Fund's flexible credit line.