Fitch Holds Morocco Sovereign Rating at BB+ with Stable Outlook

Fitch Ratings has maintained Morocco's long-term sovereign credit rating at BB+. The outlook for the next twelve months is stable. This decision reflects the country's sound macroeconomic policies. Adequate foreign-exchange reserves also support this assessment. Strong support from official creditors further strengthens the position.

The agency notes that these strengths create a relatively favorable debt profile. However, weak development and governance indicators offset some gains. High public debt levels remain a significant concern. The economy also shows vulnerability to adverse weather conditions. These factors balance the positive structural elements.

Growth expected to moderate next year

Economic growth is projected to slow from 4.9% in 2025 to 4.0% in 2026. Growth is expected to average 4.2% in 2027 and 2028. Higher energy and transport costs will weigh on activity. Weaker European demand will also impact performance. These pressures stem partly from the Strait of Hormuz crisis.

Favorable rainfall conditions should help offset these headwinds. Another strong agricultural season is anticipated. Continued investment in infrastructure and industry will also contribute. Tourism growth is expected to provide additional support. These factors will partially counterbalance external economic pressures.

Deficit widens before stabilizing by 2028

The budget deficit is forecast to widen from 3.5% of GDP in 2025 to 4.0% in 2026. Higher butane subsidies drive this increase. Continued assistance for transport operators adds to costs. Additional transfers to the national electricity and water utility also contribute. These expenditures strain the fiscal balance in the near term.

The deficit is expected to fall to an average of 3.4% in 2027-2028. This improvement assumes energy prices normalize. Public debt is projected to remain at approximately 67% of GDP through 2028. This level is well above the BB category median of 51%. Long maturities and fixed interest rates mitigate these risks.

Reserves buffer external shock risks

Foreign reserves stood at $48 billion at the end of 2025. A $4.5 billion IMF flexible credit line provides an additional buffer. This setup helps protect against external shocks. Infrastructure spending for the 2030 World Cup remains a focus. Most projects will use state-owned enterprises for financing.

Public-private partnerships and off-budget structures will also finance these projects. The agency warns of potential risks from cost overruns. Contingent liabilities could pose challenges. Legislative elections are scheduled for September 2026. Fitch does not expect a significant change in economic policy. Social discontent over spending priorities could increase pressure for higher public expenditure.