S&P shifts Morocco view to negative

S&P said it changed Morocco’s outlook to negative from stable and affirmed its foreign- and local-currency sovereign credit ratings at BBB-.

“We project that Morocco’s budgetary and external positions will deteriorate materially more than anticipated because of severe Covid-19 economic fallout. We now expect the budgetary deficit in 2020 to reach about 7.7% of GDP with net general government debt surpassing 60% of GDP and a significant rise in contingent liabilities linked to the state guarantees extended to the private sector,” S&P said in a press release.

The outlook indicates S&P could cut Morocco’s ratings within the next 24 months if net government debt levels fail to decline despite an expected economic rebound, or if real GDP growth rates significantly undershoot the agency’s estimates. Another cause for a rate cut would be the economy’s gross external financing needs continue rising, S&P said.

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