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Tue 25 Sep 2012 02:29 PM

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Arab Monetary Fund in $127m loan to Morocco

Credit facility for Morocco will help the North African nation deal with rising food prices

Arab Monetary Fund in $127m loan to Morocco

The Arab Monetary Fund said on Tuesday it was arranging a $127 million credit facility for Morocco to help the North African nation deal with rising food prices, which could threaten its political stability.

"The amount of the loan contributes to helping the Kingdom of Morocco confront urgent economic conditions, including the increasing value of imported agricultural products," the Fund, a regional Arab body with 22 member states, said in a statement.

It did not give details of the loan, but said it would bring the Fund's total lending to Morocco so far to $1.46 billion.

Since last year Morocco has experienced bouts of protest against poverty, corruption and the perceived failure of the state to help - complaints which sparked "Arab Spring" uprisings in other North African countries in 2011.

In June the Moroccan government announced one of the sharpest rises in fuel prices in several years as part of plans to cut subsidies on food and energy products and reduce the burden on state finances.

Morocco has been hit by the economic slump in Europe, a major trading partner and source of tourism revenues and workers' remittances. The International Monetary Fund approved a $6.2 billion, two-year precautionary line of credit for Morocco in August, in case its economy deteriorated and it faced sudden financing needs.

Also, wealthy Gulf Arab states - Kuwait, Qatar, Saudi Arabia and the United Arab Emirates - have pledged a combined $5 billion of financial aid to Morocco, according to the IMF, but it is not clear if any of that money has been delivered so far.

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