Despite robust growth of over four percent, the Monetary Fund identifies critical weaknesses in budget management and the labor market in the current country report.
Washington DC – The International Monetary Fund (IMF) has completed the economic inventory for the Kingdom of Morocco. While the official press release of March 25, 2026 paints a picture of stability, the detailed “Country Report” published on March 30 reveals a much more nuanced reality. Morocco is therefore at a crucial turning point: macroeconomic fundamentals are stable, but structural “glass ceilings”, particularly in employment and the transparency of public finances, could slow its future rise.
Robust growth supported by agriculture and infrastructure
The raw numbers in the report are initially impressive. Real GDP growth accelerated to an estimated 4.9% in 2025. For the current year 2026, the IMF forecasts continued solid growth of 4.4%. According to the IMF staff report, this dynamic is primarily driven by two factors: a significant recovery in agricultural production after previous droughts and massive government investment in infrastructure.
The markets’ confidence is also reflected in the rating agency S&P’s upgrade to « investment grade ». An important catalyst for this development is the hosting of major international events such as the 2030 FIFA World Cup, which, according to the IMF, opens up new growth opportunities but at the same time requires “careful risk management”.
The fragility of the fiscal framework and the legacy of special revenues
A key point of the analysis concerns the budget deficit, which fell to 3.5% of GDP in 2025. But as the business portal LesEco.ma analyzes, citing the full report, this consolidation is partly built on sandy soil. A significant portion of revenue in 2025 came from extraordinary measures, including taxes on the regularization of foreign assets and sales of state-owned real estate.
The latter accounted for 2.3% of GDP, but will dry up completely by 2028, according to the IMF. There is a risk of a financing gap for the ambitious investment plans. The IMF therefore urges the Moroccan authorities to “save at least part of the revenue overperformance” in order to rebuild fiscal space for future crises. Currently, unforeseen profits are often redirected directly into additional expenses and transfers to state-owned companies.
Public companies as a “silent budget risk”
The IMF pays particular attention to the so-called EEPs (Établissements et Entreprises Publics). Massive infrastructure projects, which will consume around 11.9% of GDP between 2024 and 2030, pose significant risks, according to experts at the fund. If the management of these funds remains poor, public debt could increase without achieving the desired increase in productivity.
The fund expresses concern about the structured financing mechanisms of these companies. Consortium loans and special-purpose vehicles create obligations that are not immediately visible in the state budget. The reform of the energy and water supplier ONEE is highlighted as an “urgent need” to clarify cost structures and prices and avoid distortions for public finances.
The employment dilemma: A structural obstacle
Despite the economic recovery, unemployment remains the “Achilles heel” of Morocco’s strategy. With a rate of 13% in 2025 and a worrying youth unemployment rate of 37.3%, there is a gap between growth and social participation.
The IMF report identifies a paradoxical situation: While 30% of private companies complain about a shortage of skilled workers, highly qualified university graduates often cannot find jobs (unemployment rate for graduates: 25.7%). One reason for this is the attractiveness of the public sector, which, according to the IMF, pays salaries that are two to three times higher than in the private sector. This leads to graduates preferring to wait for a job in the civil service rather than working in the private sector.
Geopolitical risks and the monetary transition
The external situation also remains volatile. The report sees the ongoing Middle East conflict as a “stress test”. In the baseline scenario, this leads to a reduction in growth of 0.5 percentage points and a temporary increase in inflation to 1.6% in 2026. Morocco is particularly vulnerable to commodity price fluctuations due to its dependence on energy imports (6.3% of GDP).
In the financial sector, the IMF praises the central bank Bank Al-Maghrib (BAM), but sees a medium-term conflict of objectives. Sticking to a capped dirham while moving to an inflation targeting system could muddy the message to markets. The Fund therefore recommends clear communication about the hierarchy of priorities between exchange rate stability and price stability.
The coming years will show whether Morocco can effectively institutionalize the recommended “budget rule”. The credibility of Morocco’s economic policy will depend on whether it succeeds in translating massive investments into sustainable jobs and reducing dependence on one-off sources of income.
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Source:
maghreb-post.de
