Fitch Affirms Morocco at ‘BB+ with Stable Outlook
Fitch Ratings has affirmed Morocco’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BB+’ with a Stable Outlook.
The rating note stated that Morocco’s ‘BB+’ ratings reflect sound macroeconomic policies, strong official creditor support, favourable debt profile and comfortable international liquidity buffers.
It also noted that these strengths are balanced by lower development and governance indicators compared with peers, high government debt and the economy’s exposure to adverse weather conditions.
Moody’s analysts said the country’s fiscal reforms support tax revenue. “We anticipate the central government (CG) fiscal deficit will stabilise at 3.8% of GDP in 2025 and average 3.1% over 2026-2027 from 3.8% in 2024.
“We forecast tax revenue will stabilise at 18.7% of GDP over the forecast period compared with 18.8% in 2024”. This will reflect the impact of recent tax reforms that have streamlined the tax system and supported stronger compliance balanced against the non-recurrence of the 2024 voluntary tax regularisation and the 2025 personal income tax reform that lowers effective rates, Moody’s said.
Ratings analysts expect Morocco non-tax revenue to decline to 3.6% of GDP over the forecast period from 4.2% as the government gradually scales back “innovative financing mechanisms” amid an improving fiscal position.
The country’s total revenue will average 22.5% of GDP over the forecast period, Moody’s said from 23.3% in 2024. Morocco’s lower capital expenditure is noted to offsets the country’s current spending. Ratings analysts anticipate expenditure will decline to 25.8% of GDP over 2025-2027 as lower capex more than offsets higher current spending.
“We expect current spending to average 20.2% over the forecast period due to higher social spending, including education and health systems, in line with strategies and reforms initiated in recent years.
“We expect capex will decline to an average of 6.0% of GDP in 2025-2027 versus 7.4% in 2024 This reflects the gradual completion of major projects, including the National Drinking Water Supply and Irrigation Program as well as the housing aid introduced in the 2023 budget”.
Moody’s forecast government debt will gradually decline to 67.0% in 2025 and 65.3% in 2027, significantly above the ‘BB’ median.
Ratings analyst estimate refinancing and exchange-rate risks are contained, despite the comparatively high debt-to-GDP ratio.
At the end of 2024, the Moroccan government debt was mostly medium- and long-term instruments, accounting for 88% of total debt stock, with fixed interest rates (89%) and dirham-denominated (75%).
External debt is predominantly concessional, with multilateral and bilateral debt representing 52% and 20% of external debt stock, respectively.
Morocco has initiated a large infrastructure spending programme ahead of the 2030 World Cup, which it will co-host. Projects include sports-related facilities, airports, railways and water and energy infrastructure and are estimated by Fitch based on public disclosures to cost 18% of GDP.
“We assume this spending will not burden the CG budget as we expect most projects to be financed through public-private partnerships. However, there are meaningful risks to public finances either through extending guarantees to states owned enterprises (SOEs) or higher on-budget contributions”.
Morocco is experiencing social protests with demands for improved social protection, public services and infrastructure. We do not consider the protests a plausible threat to political stability, but see risks of potential fiscal effects if the government responds with higher social and capital expenditure.
Real GDP growth was stable at 3.8% in 2024 as a significant contraction in agricultural output offset an improvement in non-agricultural growth.
Ratings analysts expect growth to accelerate to 4.4% in 2025 and average 3.9% over 2026-2027. “We expect increased rainfall in early 2025 to temporarily alleviate the drought effects and boost agricultural output. Non-agricultural growth will continue to benefit from the strong performance of export-oriented industries and infrastructure spending”, Moody’s said.
The rating note indicates that Morocco infrastructure ramped up has widened the country’s current account deficit on need to borrow to funds budget.
Ratings analysts at Moody’s project the current account deficit will edge up to 1.4% of GDP in 2025 and average 2.4% over 2026-2027 (2024: 1.2%), reflecting a deteriorating trade deficit and stabilising services surplus.
“We forecast the trade deficit will average 17.7% over 2025-2027 as the ramp up in infrastructure projects ahead of 2030 boosts imports, while exports stabilise. We expect the services surplus to average 8.3% over the forecast period reflecting stabilisation of tourism receipts”.
Morocco’s external resilience is underpinned by USD45 billion of foreign reserves at August 2025 compared with USD37 billion in August 2024. Moody’s forecasts foreign reserves to remain robust, benefiting from strong export receipts and recovering net foreign direct investment inflow.
Ratings analysts expect foreign reserves to average 5.3 months of current external payments over 2025-2027, higher than the average ‘BB’ median of 4.8 months. The IMF’s approval in April of a second two-year arrangement under the Flexible Credit Line, of about USD 4.5 billion, provides a further buffer. #Fitch Affirms Morocco at ‘BB+ with Stable Outlook#
