MOROCCO

RISK RATING
Elevated
Default High Risk Score 4.50
Normal Average 2.78
Weighted Average 2.34
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

Facing its worst economic crisis in 25 years, Morocco‚Äôs royal establishment considers postponing the 2021 elections to avoid a swing to more hardened Islamist leaders, although such a poll delay would certainly spike civil unrest risks. Morocco‚Äôs main sources of hard currency ‚Äď the vital tourism sector, exports, foreign investment, and remittances from Moroccans working abroad ‚Äď have been hit hard by the pandemic. Hardships suffered by the local population as well as delays to the implementation of these social recovery plans are likely to result in localised protests and strikes as and when lockdowns ease. Meanwhile, European multilaterals are stepping up assistance for Moroccan banks in an indication of Europe‚Äôs focus on supporting key trade and investment partners close to its own borders. Morocco‚Äôs private sector is leading the charge in battling the coronavirus, while the king has assumed control over strategy.

  • The governing Islamist PJD party is expected to emerge as the largest party at the 2021 elections. PJD Prime Minister Saad Eddine el Othmani‚Äôs government has remained committed to the king and the Makhzen‚Äôs agenda, although internal challenges to Othmani will worry the royal establishment. Former PJD leader and prime minister Abdelilah Benkirane, who is by far Morocco‚Äôs most charismatic and talented politician, is set to contest the party leadership ahead of the elections and more hardened Islamists leaders threaten the PJD‚Äôs current relationship with the Makhzen. The Makhzen is implementing a USD 12.8 billion economic recovery plan, which amounts to roughly of 11 percent of GDP. Islamists are also critical of the king‚Äôs decision to normalise relations with Israel under a US-brokered deal in which the Western Sahara region is recognised by the US.
  • The centralised administration is likely to focus on supporting the more affluent middle classes Casablanca-Rabat-Kenitra triangle. Meanwhile, marginalised public sector employees and frustrated communities in economically side-lined regions are posing a heightened risk of strikes and protests. If military-enforced restrictive measures remain in place, the risk of such protests will be relatively mitigated. However, grievances over high food prices, unemployment, and perceived government corruption will drive renewed protests, especially after a trend of mass demonstrations and military interventions in the region. An often-ignored dispute in Western Sahara has again flared, triggering risk of localised violence, and raising fears of renewed armed conflict that could draw in an increasingly nationalist Algeria.
  • International and domestic lenders are financing Morocco‚Äôs coronavirus response as the economy sharply contracts. The tourism industry, which directly and indirectly employs over 2.5 million people and represents more than 8 percent of GDP and nearly double that when its impact on other sectors is assessed, has collapsed. To offset an expected sharp drop in the reserves, the government has suspended its USD 3 billion foreign debt ceiling, with public debt now at 77 percent of GDP. If any of the country‚Äôs major banks faces a serious default or other threat in its African portfolio, the spill-over to the local economy could be disastrous and further aggravate local grievances.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
2.0
Expropriation, Nationalisation, Confiscation & Deprivation
1.5
Contract Frustration & Breach
2.5
Taxation
2.0
Bribery & Corruption
2.8
Regulatory Burden
3.0
Strikes, Riots & Civil Commotion
4.0
Security
3.0
Sovereign Default
2.5
Economic Volatiliy
4.5

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