Sustainable Development: IMF Completes the Financing of the RSF Program in Morocco

The final tranche of the RSF program has just been released to continue financing Morocco‘s economic and environmental resilience. This final phase will allow the program to conclude with a seventh reform, although the introduction of the carbon tax, initially planned in the program, has been postponed.

The Resilience and Sustainability Facility (RSF) program deployed by the International Monetary Fund (IMF) is coming to an end with the disbursement of the third and final tranche of funding planned for Morocco. This $496 million envelope supports seven reforms planned under the RSF program, bringing the total funds allocated to $1.24 billion.

Achievements through the RSF program

Of the seven reforms planned under the RSF program, six have already been implemented, illustrating Morocco’s commitment to sustainable economic transformation. The country has notably made progress in optimizing water resource management, a crucial issue in a context of persistent drought.

It also initiated, through teh RSF program, a process of liberalization of the electricity sector, intended to improve energy competitiveness and promote the integration of renewable energies into the national energy mix.

At the same time, an in-depth assessment of climate risks to financial stability was conducted, highlighting Morocco’s commitment to adapting its economy to environmental challenges.

However, the implementation of a carbon tax, initially planned as part of the program, has been postponed. This decision aims to allow for a more detailed analysis of its implications for different sectors of activity and to ensure a smooth transition to green taxation.

The IMF highlights the reform of the tax system

The Bretton Woods institution welcomed the progress made by Morocco in implementing economic and environmental reforms, included in its resilience and sustainability program (RSF).

Among the notable advances, the IMF highlights the reform of the tax system, the integration of climate risks into the budgetary framework, as well as the strengthening of the Mohammed VI Investment Fund, aimed at facilitating access to financing for small and medium-sized enterprises (SMEs).

According to Kenji Okamura, Deputy Managing Director of the IMF, the Moroccan economy has demonstrated resilience in the face of economic shocks, supported by sound policies. Despite another year of drought, growth is expected to slow only slightly, reaching 3.2% in 2024, before accelerating to 3.7% in the coming years, thanks to structural reforms and infrastructure projects.

As a reminder, this program was approved in September 2023. It aims to support Morocco’s ecological transition and strengthen its resilience in the face of natural disasters.

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(Featured image by rachid Azzouzy via Unsplash)

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First published in LES ECO.ma. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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