% annual growth rate:
Sources: M3 from Bank al-Maghrib, nominal GDP from IMF database, as at June 2022.
The medium-term relationship between money and nominal GDP growth in Morocco, 1981-2020
Five-year moving averages of annual % changes, with 1983 being the start of the first five-year period
Comment on monetary trends in Morocco
The Moroccan central bank, Bank al-Maghrib, was established in 1959. Until this point, the French Franc had been the dominant currency, but after the ending of the French protectorate in 1956, Morocco wanted to restore its monetary sovereignty and introduced the Dirham in 1959, the same year as the central bank was inaugurated.
The central bank was granted full independence in 2005 and given the task of defining and implementing monetary policy, with its prime objective being to maintain price stability. The bank is currently considering inflation targeting, but at the moment its mandate merely consists of keeping inflation "within a comfortable and stable level over the medium-term". Even before 2005, the policies of Bank al-Maghrib had been successful in keeping broad money growth below 10% during the 1990s. This has also been the case since 2009. Unsurprisingly, inflation has not been particularly problematic recently, having stayed below 6% for more than 25 consecutive years.
In 2020, in response to the coronavirus pandemic, the central bank eased monetary policy, cutting interest rates. The government also launched a series of fiscal measures to help businesses and workers. These measures were modest in scope compared with those of most developed economies, but still resulted in money growth rising to its highest level in more than a decade. Two years further on, inflation has risen to almost 6%, but it is unlikely to be as serious or persistent a problem in Morocco as in advanced economies such as the USA where the degree of monetary stimulus was so much greater.