The head of the International Monetary Fund mission to Morocco, Roberto Cardarelli, said that Morocco’s progress in reforming the dirham exchange rate system requires the fulfillment of two basic conditions, the first of which is a low inflation rate, and the second is the availability of an element of certainty regarding economic expectations, adding that the Kingdom can pass to the final stage of liberalizing its currency exchange. The dirham when the inflation rate falls to the target of 2%, which is expected to be achieved within two years or more.

Morocco began liberalizing its currency exchange rate in 2018, adopting a fluctuation range of 2.5% up and down instead of 0.3% as before. In 2020, this range was expanded to 5% in relation to a basket of currencies that includes the euro by 60% and the dollar by 40%.

The International Monetary Fund continued to insist on the Kingdom to move forward with liberalizing the dirham exchange rate during the past years, but it abandoned that after being convinced of Morocco’s justifications for the necessity of creating the economic and social environment to keep pace with this step, according to Abdellatif Jouahri, Governor of the Bank of Morocco. The International Monetary Fund believes that passing through a new phase of liberalizing the dirham exchange rate will enable better targeting of inflation, and Roberto expressed his optimism about the pace of inflation slowing down to reach a target of 2% within two years, with a view to recording about 4% in 2023.

Roberto acknowledged, in an interview with “Al Sharq Bloomberg” , the difficulty of making the decision to expand the scope of the dirham’s movement at the present time to more than the currently approved 5%, and said, “When inflation decreases and there is certainty regarding the economic outlook, the central bank can pass through a new phase when... He sees fit, when inflation is high, we must think twice before making any change.”

Inflation in Morocco 

The inflation rate in Morocco recorded 6.6% last year, compared to 1.5% on average over the past two decades. It reached its peak this year last February at about 10.1%, and the rate began to decline until it reached 5% in August, with the Bank of Morocco tightening its monetary policy and raising the interest rate to 3%. Currently, according to the latest figures issued by the bank, inflation is expected to end the current year at 6%, and to decline to 2.6% next year, which is a level close to the target set at 2%.