Rédaction Africa Links 24 with Youssra Rhardoud
Published on 2024-03-24 22:03:00
Morocco emerges as a model to follow in the face of global inflation challenges. While many countries struggle to control inflation, the Kingdom has succeeded in doing so more quickly and at lower cost.
This success is attributed to a mix of natural factors, various government measures, and effective monetary policy, according to the report from SogéCapital Bourse. The document indicates that inflation in Morocco started strong and peaked, as it did in many other countries.
In the event of anticipated drought and labor market difficulties in the Kingdom, leading to a series of inflation increases and difficulties in maintaining wages, the country benefited from a unique advantage, at least, namely: the diversity of its consumption basket.
For example, 22% of products purchased by Moroccan households are at “stable” prices or under government protection. This diversity helped to mitigate the shock of imported inflation.
The government tackles inflation
In a proactive approach, the Moroccan government is taking decisive measures to address rising prices and ensure citizens’ purchasing power, the report notes. Through a set of strategic initiatives, ranging from direct subsidies to farmers to reducing VAT on petroleum products, imposing export restrictions, and enhanced surveillance against speculation, authorities are acting on all fronts.
Massive investments in the transportation sector, with an annual budget of 8 billion dirhams between 2022 and 2023, as well as reducing the VAT rate from 20% to 10% on oil or shale oils, demonstrate the government’s commitment to stabilizing the economy.
Furthermore, direct subsidies to farmers for the 2023-2024 agricultural season, including substantial assistance per hectare for essential crops such as tomatoes, onions, and potatoes, have had an immediate impact on the price index, since December, and have been maintained in early 2024, explain experts from SogéCapital Bourse.
This proactive and pragmatic approach demonstrates the Executive’s determination to protect the economic interests of its citizens and maintain stability in an uncertain global economic context.
Morocco dominates the monetary scene
In a bold decision, the central bank emerged from the shadows to directly confront inflation. By raising the interest rate, it aimed to curb demand and stop the inflation spiral. This strategic choice has paid off, thanks to a skillful transition from monetary policy to interest rates and exchange markets, thus stabilizing import prices. Bank-Al Maghrib opted for a thoughtful approach, avoiding any rush in raising interest rates, limiting this increase to 150 basis points, with a policy rate of 3%.
While the impact of high interest rates on reducing credit remains to be determined, it seems to have contributed to the decrease in inflation. Monetary policy has also strengthened the local currency, thus mitigating the impact on the import bill despite falling commodity prices in 2023. According to the study, the policy rate is expected to remain stable for 2024, report the authors of the report.
Thus, Morocco’s success in fighting inflation, with a rate maintained at 2.3% in February, places it at the forefront of models to follow for many similar or developing countries. The country has maintained its economic and social stability, thereby minimizing the impact of the crisis on the lives of its citizens, concludes the document.
Read the original article(French) on L’Opinion
