(Adds comments from central bank governor)
By Ahmed Eljechtimi
Rabat, Dec 17 (Reuters) - Morocco’s central bank maintained its key interest rate at 2.25% on Tuesday, saying current borrowing costs were in line with medium-term forecasts for inflation, growth and public finances.
The central bank said, however, that it would implement measures to support entrepreneurs after King Mohammed VI called in October on commercial banks to make it easier for small- and medium-sized businesses to access loans.
The Bank has kept a freeze on its benchmark interest rate since March 2016 “in view of the impact it could have on lending and the mobilization of savings”, central bank governor Abdellatif Jouahri told a news conference.
Inflation, affected mainly by food prices, would drop to 0.3% in 2019, from 1.9% in 2018, before picking up to 1.1% in 2020 and 1.4% in 2021, the bank said in a statement following its quarterly board meeting.
Economic growth would slow to 2.6% in 2019, after recording 3% in 2018, because of lower farm output caused by a lack of rainfall, the bank said.
However, growth should increase again to 3.8% in 2020 and to 3.7% in 2021, assuming a crop of 8 million tonnes of cereals and an improvement in non-agricultural production, the bank said.
Services continue to offset jobs shed by the agricultural sector, helping to keep the unemployment rate at 9.4% in 2019, it said.
The current account deficit would ease to 4.6% of gross domestic product in 2019 from 5.5% in 2018, and would continue to shrink to 3.7% in 2020 and 2.9 in 2021, notably on the back of a drop in the energy import bill, it forecast.
Taking into account donations from Gulf countries estimated at 3.8 billion dirhams ($395.7 million) in 2019 and 2020, the 1 billion euro bond sale by Morocco last November and another international bond Morocco is expected to sell in 2020, foreign exchange reserves would stand at 240.7 billion dirhams in 2019, 242.7 billion in 2020 and 248.2 billion in 2021, enough to cover five months of imports.
“I advise the government to tap the bond market as soon as possible as long as borrowing terms remain the same for Morocco,” Jouahri said.
The fiscal deficit, without counting privatisation revenue, would rise to 4.1% in 2019, from 3.7% in 2019, before falling to 3.8% in 2020 and 3.5% in 2021, the bank said. (Reporting by Ahmed Eljechtimi; Editing by Angus MacSwan and Alex Richardson)