Inflation and endogenous and exogenous risks for Morocco, avenues to follow and mistakes to avoid. Mohammed Benmoussa, member of the Special Commission on the development model and vice-president of the Damir association, was the guest of “Info en Face” to talk about it.
How far will inflationary pressures go? Morocco, like all countries on the planet, faces threats and risks related to economic and military war in Europe. “Europe represents 70% of our exports. These are the exogenous risks we face (…). Alongside this, we have our own endogenous cracks, our own internal flaws and failings which amplify the impact of these exogenous repercussions”, underlined Mohammed Benmoussa, member of the Special Commission on the development model, during his visit to a new episode of “L’Info en Face”.
Is the situation still manageable? Yes. For the invitation of Rachid Hallaoy, the government must be able to manage these risks and threats as all governments do. “It is true that we are in a situation of increased fragility because we have not succeeded in protecting our economy more effectively. We have not had public policies that have been able to guarantee national sovereignty in terms of food, energy and health,” adds the vice-president of the Damir association.
How could we have done better? Hallaouy wonders. “The Governor of the Central Bank was right, and I support him, not to respond to the sirens calling on the Central Bank to increase its key rate to contain inflationary pressure (…). It was a good decision because we are in a stagflationary risk situation. We are in stagflation. That is to say that we have a scissors effect today which combines both inflation and regression”, develops Benmoussa.
According to the show’s invitation, raising the key rate would have been a double error: because, on the one hand, it would have created a depressive effect on economic activity and, on the other hand, inflation in our pay “is not monetary inflation”. Concretely, specifies Benmoussa, inflation in Morocco is not due to the fact of a tapered money supply, but rather an inflation imported because of the products which we absolutely need to run our economy. “And so, even if we had an impact on the key rate or on the reduction of the money supply, it would not reduce the inflation rate”. To prove this “disconnection” between monetary, money supply, credit and inflation rate movements, the expert has his own analysis. “In 2020, money supply increased by 8% and credit by 4.5% and inflation was 0.8%. In 2021, the money supply increased by 5.5%, credit by 3 to 3.5%, inflation was then 1.2%. In 2022, and according to the latest figures I have, the money supply is systematically stable, it even slightly decreased by 0.5%, I think, credits fell by 2% and inflation is at 3%”, supports the show’s invitation. And what to do in the face of the high cost of living, the deterioration of household purchasing power and the decline in business competitiveness? For Benmoussa, it is first necessary to release aid supported by the budget deficit. Clearly, continue the interlocutor of Rachid Halliouy, the State must assume its responsibilities with direct and targeted aid during this period. On the other hand, market regulation is also required: “There is a significant price reduction margin. In the hydrocarbons sector, in the wholesale trade and food products, there is an inflation of intermediaries which means that the prices, when they arrive in the shopping basket, there is a whole succession of margins. I want the state to intervene, to regulate these markets and to cap the margins of intermediaries and wholesalers. The State must cap the margins of hydrocarbon distributors…”