Morocco Draws on IMF Precautionary and Liquidity Credit Line

Morocco has started to draw on a $3-billion Precautionary and Liquidity credit Line from the International Monetary Fund to offset a contraction of its economy because of the coronavirus pandemic.

The five-year loan has a grace period of three years, the Moroccan central bank said.

It said the credit line would help "soften the impact of the (coronavirus) crisis on our economy and maintain our exchange reserves at an adequate level".

The credit would be used "mainly to finance the balance of payments and will not impact public debt, in a first for our transactions with the IMF,” the central bank said.

The new credit line is the fourth of its kind since August 2012. But it’s the first time that Morocco resorts to the Precautionary and Liquidity Line (PLL) because of the pandemic’s pressure on the economy.

The IMF, in a statement, said Rabat would "use funds purchased under the PLL to cope with the social and economic impact of COVID-19 and to maintain strong external buffers in a context of heightened uncertainties".

The High Commission for Planning (HCP) expected the economy to contract by 1.8 percent in the first quarter of 2020 instead of the estimated +2.1% had there not been any slowdown caused by the pandemic.

It also expected the Moroccan economy to suffer losses of 11 billion dirhams ($1.2 billion) in the same period as a result of the lockdown.

Losses were estimated at 4.1 billion dirhams ($432 million) in the first quarter, it said.