BAM’s forecasts bother the government
Abdellatif Jouahri’s latest statements have displeased the Akhannouch government. Indeed, a week after his press conference, the forecasts of the Governor of the Central Bank (Bank Al-Maghrib, BAM) have shaken the Government who was feeling comfortable without making an effort to communicate with the public opinion.
This lack of communication from the executive branch is doing a disservice to the Government, so much so that when the central bank speaks, its voice is heard while the Government is not audible. This is due to the vacuum in the political communication of the executive branch of Government. Limiting oneself to a weekly press briefing by the government spokesperson to bridge the communication gap is a shortsighted strategy. Never mind: the central bank is counting on a growth rate of 0.7% for this year, before rising to 4.6% in 2023. However, the Government had hoped for a growth rate of 3.2% in 2022. With the rainfall deficit that has been recorded, to the point that dams are at their lowest, the agricultural campaign should mark a clear decline in cereal production to stabilize at 25 million quintals versus nearly 103 million in 2021. Here again, the Appropriations Bill had based its assumptions for this year on a cereal harvest of 80 million quintals. The agricultural value added should thus drop by 19.8%, leading to a meager growth of 0.7% this year versus 7.3% in 2021. It must be recognized that the Governor of Bank Al-Maghrib has specified that his forecasts have not taken into account the latest rainfall and spring crops. If these are taken into account, Morocco could post a growth rate of about 2%, said a source familiar with the matter. Especially since the Government reminds us that the agricultural campaign may not be judged until after the end of March. It is after the beginning of April that it is possible to give an overview of the agricultural campaign. In any case, the Bank Al-Maghrib statement is a quarterly exercise, made on the basis of two months. At the next meeting, the Governor of the Central Bank will make the necessary revisions.
• The impact of the March rainfall: The Minister of Agriculture, on the sidelines of a meeting concerning the spring crop program, came forward. Indeed, according to Mohamed Sadiki, the rainfall recorded during the month of March has an immediate impact on crops that have not yet been destroyed such as cereals. The Minister said that one million hectares of cereals could experience an extremely important catch up. The overall impact on the vegetation cover, particularly on the rangelands, is significant. This will greatly alleviate the pressure on livestock, on farmers, as well as on the dairy and meat production, said the Minister of Agriculture.
• Good performance of the non-agricultural activities: The non-agricultural activities identified by the economic bulletin and the letter of the Moroccan High Commissioner´s Office for Planning (HCP) are part of a positive direction. Most indicators from the sectors of construction, industry, energy, export, from OCP, and other sources, are positive. «It is therefore difficult to say that all this is worthless», notes a source familiar with the matter. The same source puts the forecasts into perspective by talking about «the orthodoxy of the central bank, of the precautionary principle indirectly intended to force the Government to act and revitalize the economy».
• Taking a two-month period as a basis to judge the whole year? Officials at the Ministry of Economy and Finance recall that the central bank is just playing its role, but deciding the fate of the whole year on the basis of the figures for two months, January and February, is another matter. To drive the point home even more, the officials of the Ministry point out that no one knows how the conflict in Ukraine will evolve. Indeed, most international institutions do not venture to suggest concrete figures. They do not know what tomorrow will be made of. It is possible that the conflict will be over in April-May or degenerate into a world war, with its procession of destruction, displacements, and suffering for the populations, with hunger looming over them.
The inflation peak
The forecasts of the Moroccan Central Bank are considered pessimistic. The inflation rate is estimated at 4.7% while the assumptions of the draft Appropriations Bill for 2022 had reduced such a rate to 1.2%. An official said that the increase in the inflation rate is indicative of a certain trend, especially since the peak of inflation is recorded now and not within 3 or 6 months. As a result, the year will not end with an inflation rate of 4.7% because that means that during the next quarter, the rate will be 6 or 7%. One cannot therefore say that the peak is coming, especially since the oil prices have stabilized around 100 dollars a barrel.
The rise in inflation is explained by several factors, particularly the surge in international prices of raw materials and energy products. This has had an impact on the assumptions of the current Appropriations Bill. The price of a barrel of oil has risen, impacting the lives of households given the fact that the transport of goods is influenced by the price of diesel oil, which has been rising steadily in recent weeks. Fortunately, the Government has intervened with a subsidy to prevent transporters from passing on these increases to end consumers.
Mohamed CHAOUI
