Morocco’s economy improved in 2013 despite an unfavourable external and domestic environment, the IMF said in statement. The GDP growth reached 4.5% in 2013 due to a strong agriculture output while inflation remained low, the IMF said. The external current account deficit also narrowed in 2013 and FX reserves remained stable covering more than four months of imports.

The fiscal deficit, likewise, has narrowed in 2013 in line with expectations on lower international oil prices, that cut the cost of subsidies, and fiscal consolidation measures introduced by the government, the IMF underscored.

Unemployment, however, remains high, especially among the youth, the IMF warned calling for further steps to reduce poverty.

The IMF forecasts a 4% GDP growth in 2014 assuming an average harvest output, as non-agro activity is expected to accelerate. But the Moroccan economy remains vulnerable to external conditions and a difficult regional environment, according to the IMF.

The outlook, thus, continues to depend on the implementation of policies to strengthen economic resilience, ensure stronger and more job-rich growth, and improve social protection, especially for the most vulnerable, the IMF said.

Further fiscal consolidation is also needed but there should be space for investment and well-targeted social protection, the IMF noted.

Tax, subsidy and pension reforms are crucial, as is the gradual reduction in the public wage bill, the IMF underscored. Morocco should also introduce reforms to improve the business climate, transparency, the judiciary, and the labour market.

Such reforms will boost private investment, competitiveness, and employment, the IMF said.

Larger access to finance is also needed while more flexibility in the exchange rate regime would help support competitiveness, enhance the capacity of the economy to absorb shocks, and support the authorities’ strategy for diversifying external flows away from Europe, the IMF advised.