Morocco’s Improving Sovereign Credit Rating Will be More Widely Recognized, IHS Markit Says
IHS Markit was the first to lift Morocco’s rating two notches into investment grade territory
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Morocco's sovereign credit rating and outlook have been steadily improving over the last several years, according to IHS Markit (Nasdaq: INFO) a world leader in critical information, analytics and solutions.
“Morocco's external and fiscal vulnerabilities have eased considerably since 2013 through fiscal reform, subsidy reductions, and a sharp fall in global oil prices from mid-2014 through January 2016,” said Patrick Schneider, economist at IHS Markit. “Meanwhile, Morocco’s current account deficit has narrowed from a peak of 10 percent of GDP in 2012 to a much more manageable 3.2 percent of GDP in 2016.”
On the fiscal front, the country’s previously rising public debt has stabilized at close to 65 percent of GDP and should begin trending down starting this year. In addition, thanks to its prudent economic policies and reforms, Morocco recently obtained a two-year precautionary and liquidity credit line from the International Monetary Fund worth up to USD3.5 billion, its third such agreement since 2012.
IHS Markit was among the first companies to recognize Morocco’s improving economic fundamentals and was ahead of consensus in upgrading the country’s medium-term risk rating a second notch above speculative grade in December 2015. “Since then, we have had Morocco’s medium-term credit risk rating steady at BBB, or 35 points on IHS Markit’s numeric credit risk scale,” according to Jan Randolph, director of Sovereign Risk at IHS Markit. “The average rating of other companies has remained at BBB-, or 40 points on our numeric scale.”
Morocco should continue to be a strong economic performer in the region because of its economic and political stability, its linkages with Europe, Africa, and the Middle East, and its burgeoning export-oriented manufacturing sector centred on automotive and aeronautic industries.
Morocco's investment grade sovereign credit ratings are underpinned by sound policymaking, healthy external liquidity conditions, political stability, and a manageable debt profile. The country’s foreign exchange reserves are more than adequate, the debt service profile is favourable, and its government maintains good relations with external creditors and investors. Upside and downside risks for the short- and medium-term sovereign ratings are currently relatively balanced.
The Sovereign Risk Service from Global Insight by IHS Markit covers both short- and medium-term risks for 206 countries worldwide. It utilizes transparent sovereign risk ratings when assessing creditworthiness and trade credit risk and enables the comparison of IHS Markit ratings to the ratings of other agencies.
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