Morocco secures $3.5 billion IMF credit line

Morocco has secured a a two-year $3.5 billion credit line from the International Monetary Fund (IMF) for structural reforms to prompt more rapid and inclusive economic growth, Rabat’s finance ministry said on Saturday.

The Precautionary Liquidity Line is meant for countries with relatively good economic policies that face balance of payments needs because of issues beyond their control. So far, only Morocco has used this type of program.

The line provides reassurance about Morocco’s economic policies to foreign lenders, investors and rating agencies, allowing it to tap international capital markets at favorable borrowing terms.

The IMF agreed on less than the $5 billion credit line signed in 2014 and the $6.2 billion deal signed in 2012 because the North African kingdom’s economy has been improving, thanks to government measures to tackle deficits.

The IMF expects Morocco to push ahead with structural reforms of its subsidies and pension and taxation systems. It has called on Moroccan authorities to start an inflation-targeting regime and greater exchange flexibility.

Last week, Morocco’s parliament gave final approval to a pensions reform bill, the latest major structural reform passed by the Islamist-led government.