Morocco: Ex Post Evaluation of Exceptional Access Under the 2012 Precautionary and Liquidity Line Arrangement - Press Release; Staff Report; and Statement by the Executive Director for Morocco

The two-year Precautionary and Liquidity Line (PLL) arrangement with Morocco approved in August 2012 aimed to provide insurance and signal that the authorities' policies were sound and that Morocco had adequate financial resources to draw upon, should external risks materialize. Sound macroeconomic policies strengthened Morocco's economic policy buffers in the run-up to the 2008 global financial crisis, allowing it to weather the crisis relatively well. Macroeconomic vulnerabilities increased in the run-up to the PLL arrangement, stemming from weak growth in Morocco's trading partners and from international oil prices. To address those vulnerabilities, the authorities envisaged a gradual reduction in fiscal and current account deficits. And in a context of domestic and regional tensions, the reform agenda also sought to support higher potential growth (including through a reallocation of fiscal spending to favor investment spending), strengthen the social safety net, and reduce unemployment. In that vein, the fiscal strategy appropriately balanced the trade-off of strengthening buffers and supporting growth. The authorities intended to treat the PLL arrangement as precautionary. The PLL arrangement was cancelled—without having been drawn upon—and the Executive Board approved a new 24-month PLL arrangement with lower access in July 2014.