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The International Monetary Fund (IMF) executive board has approved the second assessment of the Resilience and Sustainability Facility (RSF) for Morocco, allowing for the release of an additional USD 415 million to accelerate the country’s transition to a greener economy.
Although Morocco’s agricultural production faced another drought in 2024, non-agricultural production remained strong and domestic demand is growing. With this approval, Morocco has now benefitted from a total of USD 747 million in RSF financing to support its efforts to build climate resilience in the face of persistent challenges, such as the drought that affected the agricultural sector in 2024.
In September 2023, the IMF executive board approved an 18-month RSF arrangement for a total of USD 1.32 billion. Despite structural challenges, the Moroccan economy has shown signs of stability, underpinned by the strength of non-agricultural sectors and rising domestic demand.
Increased tourism receipts, exports and remittances from Moroccans living abroad have kept the current account deficit at moderate levels, while the fiscal deficit has remained on target. In addition, the recent reduction in Bank Al-Maghrib interest rates reflects the gradual easing of inflationary pressures.
In line with the RSF objectives, Morocco has made significant investments in water infrastructure to address water scarcity, although sustained efforts to manage water resources sustainably remain crucial. To achieve its climate change goals, it is also essential to increase private sector participation in renewable energy by liberalising the electricity market, which would also help reduce dependence on imported fossil fuels and promote job creation.
In a recent statement, IMF deputy managing director Kenji Okamura praised Morocco’s commitment to climate resilience, stressing that “the Moroccan authorities continue to make progress in building resilience to climate change.” He noted Morocco’s pragmatic approach to decarbonisation, which favours excise duty on coal and pollutants over value-added taxes on fossil fuels to minimise social impacts. Okamura also noted the importance of completing the reforms included in the RSF, such as liberalising the electricity sector, adjusting taxation to meet environmental objectives, and improving fiscal and financial management of climate risks.
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The World Bank is preparing to approve USD 250 million in financing to transform Morocco’s municipal solid waste sector. As part of efforts to address the environmental and fiscal challenges associated with waste management, this financing aims to strengthen the sector’s governance, ensure its financial viability, and improve environmental practices.
The financing program will support Morocco’s Municipal Solid Waste Management Plan, which is aligned with the National Household Waste Recovery Programme and aims to increase the recycling rate from seven per cent in 2023 to 25 per cent in 2034.
