Fitch Ratings has kept Morocco’s credit rating at BB+ with a stable outlook, but expects the government’s budget deficit to increase this year. The deficit is expected to reach 4% of GDP in 2026, up from 3.5% last year.
Higher energy costs are a key reason. The crisis around the Strait of Hormuz pushed up energy prices, increasing the cost of butane gas subsidies, transport support and payments to the national electricity and water company.
Fitch expects this pressure to ease. The deficit is forecast to average 3.4% of GDP in 2027 and 2028 as energy prices return to more normal levels and extra spending linked to the Hormuz crisis falls.
Government debt is also expected to stay high. Fitch forecasts it at around 67% of GDP through 2028, compared with a 51% average for countries with a BB rating.
The country has some protection against refinancing risks because much of the debt has long repayment periods and fixed interest rates. Morocco also makes significant use of concessional foreign financing.
Large infrastructure projects linked to the 2030 Fifa World Cup will keep public investment high. Capital spending is expected to average 7.5% of GDP.
Much of the wider World Cup investment is expected to be funded through state-owned companies, public-private partnerships and other arrangements outside the main government budget.
Fitch warned that cost overruns or extra government support could still put pressure on public finances.
The current-account deficit is also expected to widen this year. Fitch forecasts it at 3.8% of GDP in 2026, compared with 2.5% in 2025.
A higher energy import bill and weaker demand from Europe are expected to drive the increase. Stronger phosphate exports and tourism earnings should provide some support.
Foreign exchange reserves stood at about $48bn at the end of 2025. Fitch expects reserves to cover an average of 5.1 months of external payments between 2026 and 2028.
The IMF approved a new two-year Flexible Credit Line worth about $4.5bn in April 2026, giving the country another financial buffer if external conditions worsen.
Economic growth is expected to slow to 4% this year, from 4.9% in 2025. Fitch expects growth to average 4.2% in 2027 and 2028, helped by a stronger agricultural season if rainfall remains favourable.
The legislative elections on 23 September are not expected to bring a major change in economic policy. Fiscal consolidation is expected to remain a priority, although pressure over government spending could increase.
Fitch also pointed to weaker governance indicators and high unemployment, especially among young people in cities. These issues have contributed to repeated protests in recent years.
The rating agency sees strong economic policies, foreign exchange reserves and support from official creditors as key factors supporting the BB+ rating. High public debt, weaker development indicators and the economy’s exposure to bad weather remain key challenges.
