Morocco Launches Sovereign Bonds Worth $750 Million
In a significant move to bolster its economic standing, Morocco has announced the issuance of sovereign bonds totaling $750 million in the international market. This announcement was made on Friday, highlighting the country's ongoing efforts to navigate its economic challenges. The Moroccan state news agency reported that the bonds are structured in two parts: the first being $500 million with a repayment period extending to 2022, and the second amounting to $250 million, which is set to mature by 2042. However, the specific interest rates and the financial institutions involved in this transaction have not been disclosed.
A high-ranking official from Morocco's Ministry of Economy and Finance, who preferred to remain anonymous, confirmed to Anadolu Agency's correspondent that the nation is planning to issue additional financial bonds worth a billion dollars in the upcoming weeks. This was further emphasized by the announcement of Nizar Baraka, Morocco's Minister of Economy and Finance, who traveled to London recently to explore the options for launching these bonds.
Morocco's government has acknowledged that the country is grappling with an economic crisis, as evidenced by a reported budget deficit of approximately 7.1% at the beginning of this year. In an interview with Anadolu Agency in mid-April, Idriss Azmi, the Moroccan Minister in charge of the budget, recognized that the country's economy is facing "financial difficulties," attributing this to external factors such as rising energy prices.
Earlier this year, the Moroccan government had ruled out the possibility of resorting to international markets to address its foreign currency crisis, despite the external debt ratio being estimated at 57% of the gross domestic product (GDP). The government has emphasized the importance of keeping this ratio below 60% of GDP in line with Morocco's commitments to the International Monetary Fund.
In August of the previous year, Morocco secured an agreement with the IMF for a credit line worth $6.2 billion, although the Moroccan government has stated that it will only utilize this line if absolutely necessary. In December of last year, the country successfully issued sovereign bonds amounting to $1.5 billion, which was also divided into two parts: one part worth $1 billion with an interest rate of 4.25% for a repayment period of 10 years, and a second part of $500 million with a maturity period of 30 years at an interest rate of 5.5%.
Moreover, Morocco is currently facing a decline in its foreign currency reserves, which stood at $16.985 billion at the end of March, equivalent to 145.2 billion dirhams. This amount is sufficient to cover the country’s imports of goods and services for approximately four months and three days, according to the Moroccan central bank. This decline has been attributed to a 2% drop in tourism revenues and a 2.9% reduction in remittances from Moroccans living abroad by the end of February, despite foreign direct investments reaching $1.18 billion during the months of January and February, up from $614 million in the same period in 2012, as previously reported by Abdellatif Jouahri, the governor of the Moroccan central bank.
The Moroccan government has committed at the beginning of this year to maintain its foreign currency reserves at a level adequate to cover at least four months of imports of goods and services.
As reported by aa.com.tr.
