On March 23rd, 2010, Standard & Poor`s Ratings Services raised its long-term foreign currency sovereign credit rating on the Kingdom of Morocco to `BBB-` from `BB+`, and its long-term local currency sovereign credit rating to `BBB+`from `BBB`. Standard & Poor`s also raised its short-term foreign currency sovereign credit rating on Morocco to `A-3` from `B` and its short-term local currency sovereign credit rating to `A-2` from A-3`. The outlook on the long-term ratings is stable. Standard & Poor`s raised its transfer and convertibility assessment for Morocco to `BBB+` from `BBB`.
At the same time, Standard & Poor`s affirmed the `BBB-` foreign currency issue ratings on the Kingdom`s foreign currency commercial debt, and withdrew its recovery rating of `2` on the debt issued by Morocco; such ratings are only assigned to the foreign currency debt issued by speculative-grade issuers. Morocco is the 15th sovereign to have its foreign currency debt raised to investment grade.
The upgrade reflects our view of the Moroccan government`s improved economic policy flexibility as a result of its track record in reducing the country`s fiscal and external debt burdens over the past decade. Once a key credit weakness, Morocco`s general government debt indicators have converged with the `BBB` median more rapidly than we had previously expected, while the external balance sheet continues to compare favourably with those of `BBB` rated sovereigns.
We also factor in the high political stability and the government`s momentum for its reform program, including large public works, which has raised Morocco`s trend growth prospects, and contributed to improving gradually the country`s still weak social indicators.