Tier three beckoning for Morocco – MENA Q1 results

Jeremy Weltman
Published on:

Morocco is some nine points and 21 places higher than Lebanon on a score of 47.2 points, though also a tier-four sovereign.

Ranking 71st on the 186-country global scoreboard, the sovereign has seen confidence slowly return, with its score increasing by 1.2 points since Q4 2012 and 1.8 compared with a year ago.

While there might still be a considerable gap between Morocco and the next-safest MENA country, Bahrain (on 54.8 points), the sovereign’s recent climb has put it within three points of tier-three status.

This has been reflected in a credit-rating upgrade since Euromoney’s last survey round-up for Q4 2012, with Fitch and S&P having raised their assessments of Morocco to BBB-, in line with the equivalent Moody’s rating.

The country’s government finances score has weakened a notch since Q4 2012, along with the score for institutional risk, highlighting lingering concerns. Yet, 11 of its 15 risk indicators have improved year on year, including all six political assessment sub-factors.

Morocco is now safer, too, than many of its similarly ranked sovereigns, not only in North Africa but right across emerging Europe. It might not be long before the negative outlook attached to the ratings by Moody’s and S&P will have to be removed.

As Kojo Amoo-Gottfried, an analyst at FM Capital Partners and one of ECR’s Morocco experts, notes in Dinar continues to show strength:

“Morocco appears to have been relatively insulated from activities in its region. The Arab Spring had limited impact in the country with no change of government, given the better relations enjoyed compared to other North African countries.

“The government was also very proactive and calmed tempers especially with the constitutional revisions, [which] prevented the scenes witnessed in other Arab countries.

“The debt crisis in the eurozone, its largest trading market, has reduced demand for exports but the country has managed to keep growing, albeit much slower than usual. GDP [growth] has been positive every time bar once since the third quarter of 2010.”

This article was originally published in Euromoney Country Risk.