The Washington-based IMF has agreed a two-year $3.47bn precautionary and liquidity (PLL) fund with Morocco.

Morocco will have access to $1.73bn in the first year, but has stated it does not intend to use the facility.

The PLL is intended to insulate Morocco from external shocks as Rabat continues to reform the economy and reduce its deficits. It is the third PLL since 2012, and the first two were not utilised.

“Despite the difficult global and regional environments, Morocco has made significant strides in reducing fiscal and external vulnerabilities and addressing medium-term challenges,” said Mitsuhiro Furusawa, IMF deputy managing director in a statement. “External imbalances have declined substantially and fiscal consolidation has progressed, while policy and institutional frameworks have been strengthened, including through the implementation of the new organic budget law, the adoption of the civil service pension reform, and ongoing improvements to financial sector oversight.”

However, Morocco is still at risk from external factors such as slower growth in its main trading partners, namely EU countries, security and geopolitical risks which could affect the tourism sector, and global financial volatility.

The IMF is encouraging Morocco to move ahead with reforms such as fiscal decentralisation, new financial sector regulations, a Central Bank focus on inflation targets and exchange rate flexibility.

Morocco also needs to improve its business climate, competitiveness and labour regulations to increase growth and reduce unemployment, especially for youth and women, the IMF recommends.