Morocco is considering tapping at least part of an about $3bn liquidity line with the International Monetary Fund, as the coronavirus outbreak forces authorities to scrap a cap on foreign borrowing, two people familiar with the matter said.
If taken, the move would be the first time the North African kingdom has sought to draw funds from the credit line since the arrangement was struck with the IMF in 2012. Morocco, which had initially budgeted $3bn in international borrowing for 2020, may now seek double that figure, the people said.
The government on Monday approved a decree to lift the overseas funding cap, saying it would help Morocco cover its foreign-currency needs.
The pandemic has crippled auto exports and the tourism sector – two of the country’s main foreign-currency earners – exacerbating economic turmoil caused by a drought and prompting a prediction of Morocco’s worst growth this century.
Authorities were already struggling to cut spending without igniting the kind of social unrest that has rattled neighbours like Algeria.
The government is still assessing the funding needed to plug the current account and budget deficits, the two people said. They requested anonymity because they’re not authorised to brief the media.
Along with the IMF liquidity line, other foreign borrowing options are being considered, including a bond sale when signs of normality return to the global market, they said.
The Finance Ministry didn’t immediately respond to a request for comment.
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