Morocco trade gap raises chance of tapping IMF loan

Reuters, Tuesday 16 Oct 2012

Recent trade shortfall and a credit rating downgrade mean the North African kingdom may fall back on $6.2 billion credit line

Morocco's trade deficit rose 5 per cent in January-September from a year earlier, the foreign exchange regulator said on Monday, raising the chances the country might have to dip into an IMF facility due to dwindling foreign currency reserves.

The trade shortfall rose to 144.2 billion dirhams ($16.8 billion) although the year-to-year rise was less marked than the 6.1 per cent increase in January-August.
Credit-rating agency Standard & Poor's downgraded Morocco's outlook to 'negative' from 'stable' last week, citing risks created by fiscal and current account deficits and fed by the crisis in the eurozone, its main business partner.
The warning could hurt Morocco's maiden dollar sovereign bond issue in November.
The eurozone crisis has also weighed on tourism receipts, which fell 3.6 per cent in the year to end-September, but this drop too was smaller than a 5 per cent percent fall in January-August.
Foreign currency reserves by 4 October stood at 134 billion dirhams, barely enough to cover four months of import needs. The ratio exceeded five months a year earlier.
However, Morocco can fall back on a $6.2 billion credit line granted by the International Monetary Fund in August.
Morocco's economic growth is expected to slow to around 2 to 3 per cent this year from 4.9 per cent in 2011, while a smaller domestic harvest and rising commodity prices mean it will have to import more agricultural products and at a higher price. 
The rising price of oil will also boost its import costs.
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