Impact of COVID-19 on Morocco’s Economy
By Oumaima Fathi
Context:
According to The United Nations Development Programme, the coronavirus COVID-19 pandemic is the defining global health crisis of our time and the greatest challenge we have faced since World War II. The death toll worldwide so far from the coronavirus COVID-19 outbreak is 2,759,685 as of March 25, 2021.
The COVID-19 pandemic officially emerged in Morocco on March 2, 2020. As the rest of middle-income countries, Morocco faces hefty challenges to recover its economy from the pandemic’s repercussions.
Morocco’s early response to the COVID-19 pandemic:
Morocco has taken strong prompt measures to halt the spread of the coronavirus epidemic. Starting the 15th March 2020, Morocco suspended all international flights, and the following day all educational institutions from pre-primary to tertiary and non-essential businesses were closed. On the 19th March, Morocco declared State of Emergency that went into effect the following day alongside a nationwide lockdown.
Economic impact of COVID-19 crisis in Morocco:
Figure: Sectorial Economic Vulnerability to Lockdown Measures in Morocco
The implementation of preventive measures to control the coronavirus outbreak in Morocco led to the disruption of key economic sectors:
According to Fitch Rating, a US-based international credit rating agency, Morocco is among four of the fourteen Middle East and North Africa (MENA) countries that have been hardly affected in public and external finances and growth by the COVID-19 pandemic.
According to the High Commission for Planning (HCP), the share of tourism sector represented 7.1% of Morocco’s GDP in 2019. Nevertheless, the loss caused by the coronavirus crisis to Morocco’s tourism is estimated to be 18.2 billion MAD (around 2 billion USD) in the first seven months of 2020. The Moroccan Minister of Tourism Nadia Fettah Alaoui declared that 87% of hotels in Morocco have closed due to the COVID-19 crisis.
Moroccan businesses, especially small and medium-sized enterprises, have been hardly hit by the pandemic. About 142,000 companies declared suspending their activities: 135,000 temporarily and 6,300 permanently.
Measures to alleviate the economic impact of the COVID-19
Morocco’s King Mohammed VI ordered the creation of an emergency special fund to provide financial support to economically vulnerable citizens and businesses. Moroccan institutions, banks, and government’s officials joined the initiative. The fund raised about $3.2 billion as of end of April 2020.
Morocco’s Ministry of Economy, Finance, and Administration Reform launched the program “Damane Oxygene” to protect businesses from bankruptcy in the face of the COVID-19 crisis. The program benefited eligible companies by covering part of their loans, up to three months of operating expenses or periodic interest payments.
The CDG group, a state-owned financial institution, facilitated access to financing by SMEs and micro-enterprises by putting in place various exceptional tools. This includes the extension of financing deadlines, increase in the share of financing, and postponement of credit repayment terms up to 3 months. For self-entrepreneurs, a zero-interest rate has been decided of up to 15000 Moroccan Dirhams (Around 1500 USD).