Fitch Ratings confirms the Investment Grade assigned to the Kingdom of Morocco : 21/09/2009

Fitch Ratings confirms the Investment Grade assigned to the Kingdom of Morocco

The international rating agency Fitch Ratings confirmed the level of investment grade assigned to the Kingdom of Morocco with a steady prospect in September 14th, 2009.Foreign currency debt and local currency debt are matched, respectively grades `BBB-` and `BBB?. The grade`F3` of the short-term foreign currency debt and the ceiling grade `BBB` have also been confirmed   

According to Fitch, these grading levels are maintained by the resilience of the Moroccan economy against the global economic crisis, the continued improvement of public finances and the stability of the Moroccan political system. The progress realized in terms of the diversification of the economy mainly towards activities with higher value added, which resulted in a sustained growth rate, will be a key element in the performance of the medium term rating assessment.

Fitch added that the Moroccan economy has weathered the international crisis and recorded a growth of 5.6% in 2008. According to the agency, this economic performance has benefited not only from the rebound in agricultural production, but also from the diversification and orientation of the economy towards (industries, services oriented to export) as well as greater Investment projects such as infrastructure and housing.

The agency also stressed the improvement of the fiscal balance over the last three years because of the performance recorded at tax revenues level and control spending level, despite a significant increase in compensation expense under food and oil. This has gradually reduced, according to the agency, the debt ratio that has reached 47.3% of GDP in 2008.

Fitch also stated that the crisis didn?t have an impact on Moroccan banks due to their relatively limited integration into the global financial system and rigorous regulation by the Central Bank.

However, the agency underlined that poverty in rural areas and low social indicators, compared to those in countries rated as Morocco in investment grade, are elements that must be taken into account.

As to the effects of the crisis, Fitch noted that external trade has suffered from rising commodity prices and recession in Europe. This results in a deterioration of current account deficit of the balance of payments and a decline of foreign exchange reserves. However, the net external position of Morocco remain better than the median of the countries rated in the BBB category and stated that foreign exchange reserves remain at comfortable levels.

Fitch also expects that key ratio solvency of public finances and external finance converge on the median values in the countries rated "investment grade".