IMF approves Morocco's economic strategy

Nemat Shafik says strategy was built on "prudent monetary and financial policies"

Nemat Shafik

Nemat Shafik

The International Monetary Fund said on Monday it had completed the first assessment of Morocco's economic program under a two-year precautionary credit line, indicating the country had met all the performance criteria of its $6.2 billion loan.

Nemat Shafik, the IMF's deputy managing director, said the Moroccan authorities' economic strategy was "built appropriately on fiscal consolidation, structural reforms and prudent monetary and financial policies."

But the IMF urged the government to move forward with reforms of its subsidy and pension systems.

Last month, Morocco's minister in charge of the issue said the government might start reforming its expensive system of subsidies for food and energy in June, if a political decision was taken to do so.

State subsidies on food and energy shot up to 53 billion dirham ($6.25 billion) in 2012 - 15 percent of total public spending - from 48.8 billion in 2011 and 29.8 billion in 2010.

The government has said it wants to repair its finances by reducing subsidies and shifting spending more toward the poor.

Subsidy reform is politically sensitive in Morocco, where street protests erupted demanding democracy and better economic management in the wake of the Arab Spring uprisings across North Africa.

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