IMF experts see rise in Moroccan currency over long period
Morocco, Economics, 4/30/2003

The real value of the Moroccan currency, Dirham, rose by 21 percent between January 1991 and March 2001, mainly due to the heavy weight of the Dollar in Morocco's reference basket, said experts of the International Monetary Fund (IMF).

The rise prompted Moroccan monetary authorities to readjust in April 2001 the composition of their reference basket in favor of the Euro, which led to a relatively moderate decrease in the nominal effective exchange rate, said Abdelali Jbili and Vitali Kramarenk, respectively under-director of the Middle East and North Africa and senior economist at the IMF.

Despite a progress in terms of macro economic stabilisation, growth was relatively weak due to the Moroccan economy's dependence on agriculture and the "slowness" in implementing structural reforms, the two experts said in a story published in the latest issue of the IMF "Finances and Development" quarterly.

Thanks to restrictions on capital movement, Morocco's central bank managed to preserve certain autonomy in conducting monetary policy, they said, adding that under the impact of a cautious monetary policy, inflation --measured in terms of consumption prices index-- headed towards the level noted in developed countries.

The two experts --who concentrated on Morocco, Egypt, Jordan, Lebanon and Tunisia as five emerging countries in the Middle East and on Iran as an oil producing country-- noted that more flexible exchange systems would be more appropriate to help these nations gain more capital, while fixed rates or narrow fluctuation margins would be costly.

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