The Kingdom of Morocco plans to raise at least $1 billion from an international bond sale this year, ending a roughly five-year pause, and shift to a policy of more consistent offerings to finance its broader economic development program.
According to Morocco’s Minister of Finance and Economy Mohamed Benchaaboun, the Kingdom has mandated a consortium of banks for its first bond sale since 2014 and plans another go-to-market in 2020. The deal should take place within this year with the exact dates not officially known yet.
In 2018, King Mohammed VI instructed the government to develop a new growth model that caters for the needs of the country’s $109.1 Billion GDP economy with an emphasis on implementing strong measures to combat tax evasion.
According to Benchaaboun, the Kingdom will continue evaluating the market in a way to build up the share of external financing in the country’s overall debt.
One should note that Morocco’s growth has fallen to 24 months low mainly due to drought and lower consumer demand.
This go-to-market plan represents a notable shift in the Kingdom’s overall strategy as the previous
minister, Mohammed Boussaid, was somewhat reluctant towards turning to international markets.
This shift is part of the Kingdom’s strategy to involve state-owned businesses in the financing of the country’s development projects that have been up to date solely dependent on government financing.
According to Benchaaboun, presence in the international bond market will allow from the one hand to set pricing target for the debt the country intends to raise and will offer from the other hand the possibility for faster mobilization of financing on behalf of the lenders.
Earlier this month, the International Monetary Fund, in its latest review of precautionary and liquidity line arrangement with Morocco, stated that “improved fiscal management and economic diversification” made the Moroccan economy more robust although youth unemployment remains relatively high.
In response to the International Monetary Fund, Morocco emphasized the on-going efforts to increase productivity gains, create jobs, and increase the country’s growth potential as per the country’s medium-term strategic objectives.
According to Benchaaboun, Morocco is maintaining its 3.2 % growth projections despite drought affecting Agriculture’s growth. Among the measures the government is taking to boost growth is to establish the first real-estate investment fund expected to provide a fundamental source of financing for businesses across various sectors that would lead in their turn to boost growth and create more jobs.