Morocco economic policy is focused on driving faster growth and reducing high levels of youth unemployment, poverty and illiteracy. The IMF completed its final review under the USD 3.5bln Precautionary and Liquidity Line (PLL) arrangement for 2016-18 in January 2018, and further praised the authorities for their progress in implementing sound macroeconomic policies and reforms (such as the introduction of public pension reform and an organic budget law to increase budget transparency) that have helped to reduce the country's fiscal and external deficits.
On the revenue side, the government has pledged to increase value-added tax (VAT) on fuel products and insurance services, while also introducing fiscal controls, improving tax collection and broadening the tax base, but it also plans to reduce corporate tax rates. Having long promised to start loosening exchange-rate controls so that the economy is better able to absorb external shocks, Bank Al Maghrib (central bank) introduced a marginal widening of the MAD fluctuation band in mid January.
It is expected that the liberalization process will be very gradual and tightly managed, as authorities have long been concerned about potentially harmful exchange rate volatility. Morocco's economy is sensitive to fluctuations in agriculture, which accounts for around 15% of GDP. After reaching 4% in 2017, driven by a rebound in agricultural production, real GDP growth is forecast to slow to 3.2% in 2018, as weather conditions look set to be less favourable during the current harvest season.