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S&P revises outlook on Morocco to stable

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S&P revises outlook on Morocco to stable

S&P Global Ratings on Oct. 4 changed the outlook on Morocco's credit ratings to stable from negative, citing expected improvement in the country's budgetary position.

The long- and short-term sovereign credit ratings were affirmed at BBB-/A-3.

The agency said it expects the North African nation's fiscal consolidation plan and the proceeds of its privatization efforts to help its budgetary position gradually improve and reach 3% of GDP in 2022. It also expects Morocco's real GDP growth to reach 2.8% in 2019, constrained by weakening growth in its agricultural output and the ongoing economic slowdown in Europe, before rebounding to about 4.0% by 2021.

Furthermore, the IMF's precautionary and liquidity line from December 2018 reinforces the country's macrofinancial stability as well as its economic and budgetary policy objectives, the agency noted.

S&P Global Ratings said it could lower Morocco's credit ratings in the event that the government diverges from its fiscal consolidation plan, which will lead to materially higher government debt and significantly lower real GDP growth rate than projected. A downgrade could also be driven by a widening of the country's external imbalances, which will result in a material increase in the Moroccan economy's gross financing needs.

A ratings upgrade, meanwhile, could be triggered by a material improvement of the country's budgetary consolidation prospects or if its shift toward a more flexible exchange rate regime significantly boosts its external competitiveness and ability to endure macroeconomic external shocks.

The African nation's BBB-senior unsecured debt rating was also affirmed.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.