Moody's changes Morocco's outlook to stable from negative
Morocco, Economics, 6/21/2003

Moody's Investors Service has changed to stable from negative the outlook on Morocco's foreign currency country ceiling and local currency government bond rating of the Kingdom of Morocco.

The New York-based rating firm explains that the change in the outlook mainly reflects the improvement in the country's public finances. After three years of fiscal deterioration from 1999 to 2001, Morocco's fiscal deficit improved in 2002 due to a stabilization of tax revenues and a fall in the growth rate of fiscal expenditures. In addition, the government's decision last year to limit public sector employment to the number of people leaving for retirement is seen by Moody's as a positive step towards containing structural fiscal expenditures in the future.

Moody's said that the change in outlook also reflects the reduction in Morocco's level of public debt due to the government's active debt management strategy. The agency noted that the largest reduction in the debt-to-GDP ratio took place in 2002 when the country benefited from a GDP growth rate higher than the real rate of interest.

In 2003, Moody's expects the GDP growth to remain strong despite last May 16 terrorist attacks in Casablanca. The positive forecast is based primarily on the significant rainfalls in 2002 and 2003, which will ensure strong growth in agricultural output and therefore a strong GDP growth rate, despite the expected fall in tourism revenues.

In Moody's opinion, the government resulting from the autumn 2002 parliamentary elections is strongly committed to the implementation of a broad range of reforms in the areas of social policy, governance, and privatization -- as recently demonstrated by the sale of the Regie des Tabacs, Morocco's tobacco monopoly, to Altadis, the French-Spanish tobacco company, for US$ 1.5 billion.

Previous Stories:
  Morocco, EU likely to conclude agreement on agriculture before end of the year   (6/20/2003)
  France extends Morocco 750,000 Euro for expats' enterprise creation   (6/20/2003)
  Morocco issues first international bond loan   (6/20/2003)
  Moody's delegation to Morocco to establish new rating   (1/24/2000)
  Moody's report upbeat about Morocco's economic prospects   (4/7/1999)

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