Morocco will start a gradual and controlled liberalization of its currency the dirham from Monday, Prime Minister Saad-Eddine Al-Othmani said after a cabinet meeting.
The North African country has had a fixed exchange rate regime for the dirham since the 1970s. It is pegged to the euro and the dollar. Othmani spoke to AFP on Friday after a cabinet meeting during which the long-expected decision was taken.
The process of moving towards what the authorities call a “flexible exchange rate” had been expected to begin in July after a recommendation by the International Monetary Fund. But the move was delayed with the government arguing that it needed more time to study the procedure. Officials have stressed that there would be no devaluation of the dirham.
The finance ministry said in a statement on Friday that Bank Al-Maghrib, the country’s central bank, will “continue to intervene on the exchange market to ensure liquidity”. The World Bank said in a report in April that the “gradual move to a more flexible exchange rate regime” should “help strengthen Morocco’s competitiveness”.
It said the outlook for the country’s economy was expected to improve, provided that the government remains committed to “pursuing prudent macroeconomic policies and implementing structural reform”. Earlier this year, Moroccan media said full liberalization of the dirham would take up to 15 years.