Rabat (AFP)

Morocco announced Tuesday using the Precautionary and Liquidity Line (LPL) of the International Monetary Fund (IMF), to the tune of three billion dollars, a first which aims to deal with the consequences of the coronavirus epidemic.

The original draw is "repayable over five years, with a three-year grace period," said the kingdom's central bank, Bank Al-Maghrib, in a statement.

Its mobilization comes "within the framework of the agreement under the LPL concluded with the (IMF) in 2012 and renewed for the 3rd time in December 2018, for a period of two years, with the intention of using it as insurance against extreme shocks, said the same source.

The LPL is an instrument designed "to serve as insurance or to help resolve crises, and this in a wide range of situations", also says the IMF on its website.

This system serves as a guarantee for economically fragile countries to reassure international markets, and beneficiary countries often do not need to activate these sums.

The kingdom decided to resort to it at a time when "the unprecedented scale of the Covid-19 pandemic suggests a much deeper global economic recession than that of 2009", which will consequently impact the local economy, argued Bank Al-Maghrib.

This remedy "will help to mitigate the impact of this crisis on our economy and keep our foreign exchange reserves at an adequate level".

This sum will be "allocated essentially to the financing of the balance of payments and will not impact the public debt, which constitutes a first in our financial transactions with the IMF", underlines the Moroccan institution.

Morocco, which had 1,242 officially declared cases on Wednesday, with 91 deaths, has taken drastic measures to limit the spread of Covid-19.

Aid for affected businesses, employees and informal workers has been implemented at the same time, via a special fund supplied by public companies and donations from the private sector.

A draft decree-law adopted on Monday authorizes the government to exceed the ceiling for external financing provided for by the 2020 finance law in order to meet its foreign exchange needs, according to the press.

Tourism, a key sector of the Moroccan economy, will in particular be greatly affected, even though the risk of drought already worried the kingdom, which depends heavily on its agriculture.

The High Commission for Planning (HCP), the Moroccan statistical agency, said Wednesday it expects a 1.8% drop in GDP in the second quarter, instead of the + 2.1% initially forecast before the pandemic.

© 2020 AFP