Reuters
UPDATE 2-Morocco central bank keeps benchmark interest rate unchanged
Tue Jun 17, 2014
* Central bank keeps rate on hold since 2012
* Morocco is finalising a new line of credit with the IMF
* The line would be less than the previous $6.2 billion (Add details and quotes)
By Aziz El Yaakoubi
RABAT, June 17 (Reuters) – Morocco’s central bank held its benchmark interest rate at 3 percent on Tuesday, forecasting inflation would be consistent with its medium-term goal for price stability.
Citing persistent internal and external uncertainties, the bank lowered its estimate for 2014 gross domestic product growth to 2.5 to 3 percent, from an earlier estimate of 2.5 to 3.5 percent.
Growth has also been trimmed by bad weather that hit the agricultural sector. The country expects a cereal harvest this year of 6.7 million tonnes, including 3.7 million tonnes of soft wheat, down from 9.7 million tonnes in 2013.
The bank said it had taken into consideration government decisions to cut subsidies and raise minimum wages.
“Inflation is expected at 0.9 percent in 2014, 1.3 percent on average over the forecast horizon and 1.5 percent at the end of this horizon (third quarter 2015),” the statement said.
Morocco’s Islamist government raised energy prices to cut subsidies to meet International Monetary Fund (IMF) requirements. It expects 2014 GDP to grow 3.5 to 4 percent.
The central bank, officially known as Bank al-Maghrib, has kept rates on hold since March 2012, when it cut them by 25 basis points to 3 percent.
Morocco is finalising a new two-year line of credit with the IMF and it would be less than the $6.2 billion granted by the fund in 2012-2014, Morocco’s central bank Governor Abdellatif Jouahri told reporters.
“The first credit line was around 700 pct of Moroccan quota. We don’t need all that amount as Morocco have reduced significantly deficits since 2012,” he said. “But it is up to the government to take the final decision.”
IMF chief Christine Lagarde said last month that the fund was ready to renegotiate a $6.2 billion precautionary line of credit for Morocco if its government believed it was needed.
The IMF credit line provided reassurance to Morocco’s foreign lenders, investors and rating agencies, allowing it to tap international capital markets at favourable borrowing terms.
Last week, Morocco offered 1 billion euros of a 10-year Eurobond with a yield of 3.7 percent. It got orders for 2 billion euros as it tapped into growing demand for euro-denominated emerging market debt.
(Reporting by Aziz El Yaakoubi; Editing by Larry King and Sonya Hepinstall)
