The Moroccan Economy in Brief: Tuesday, August 9, 2022

Gas: Sound Energy is looking for a co-investor in Tendrara:

On Tuesday, August 9, Sound Energy PLC announced that it is seeking a co-investor partner for its gas project in Tendrara Onshore, in the Eastern region. The oil and gas company has evaluated financing solutions for the remaining $60 million of the net development costs of this project, which it holds up to 75%. The aim is to finance the second phase of the project, as well as to advance exploration in the Grand Tendrara and Anoual areas, the British company said.

Average monthly net borrowing at 13.4 billion dirhams at S2:

The average gross financing requirement per month would be 13.4 billion dirhams in the second half of 2022 (S2-2022), according to Attijari Global Research (AGR). Based on the Finance Act (LF-2022) forecasts of the need for the Treasury and the level of its estimated losses of 61 billion dirhams during the rest of 2022, we estimate that the average gross borrowing requirement per month would be 13.4 billion dirhams by H2-2022."indicates AGR in its latest "Research report fixed income" document entitled "towards a continuation of the rate increase in 2022". This is a relatively high level and should increase pressures on primary rates, AGR rating .

Treasury: A budget deficit below 6% of GDP?:

According to analysts at Attijari Global Research (AGR), the Treasury is able to control its budgetary deficit in 2022 below 6% of Gross Domestic Product (GDP). In its latest report "Research report fixed income" entitled "towards a continuation of the rate increase in 2022", AGR notes that "in the end, we remain convinced of the Treasury’s ability to control its budgetary deficit in 2022 below 6.0% of GDP". At this stage, AGR recalls that the Ministry of Economy and Finance has revised its deficit and growth forecasts for the current year in view of recent developments at 5.3% of GDP and 1.5% respectively.

BDT: investor demand continues its downward trend:

Investor demand for Treasury Bills (BDT) fell by 16.1% from 169 billion dirhams to 141.8 billion dirhams by the end of the first half of 2022, says Attijari Global Research (AGR). After a decline by 11.1% in H1-21, BDT investor demand droped significantly by 16.1% at the end of H1-22, from 169 MMDH to 141.8 MMDH over this period,” says AGR in its latest “Research report fixed income”, entitled “towards a further rate increase in 2022". According to the analyst, investors' appetite for BDT continues its downward trend initiated since 2019 in the margin of expectations of normalization of medium-term rates. When analysing the distribution of investor demand in S1-22, AGR noted an interest in short and medium-term maturities (MTL), which weighed 82% compared to 76% in S1-20. The weight of long maturities remains at low levels around 18% over the same period.

"Comfortable" public accounts in S1 (AGR):

The government’s public accounts remain “comfortable” for the first half of 2022, says Attijari Global Research (AGR). The budget deficit stood at 18.3 billion dirhams at the end of June 2022, up + 11.1 billion dirhams year-on-year, says AGR in its latest "Research report - fixed income", entitled "towards a further rise in rates in 2022", adding that this development took place in spite of a clear increase in government spending in an inflationary context. According to the analyst, the favourable behaviour of tax revenues during this first half. Based on the analysis of the first two down payments in 2022, corporate tax revenues were driven by the Phosphates, Cement and Finance sectors. Tax revenues thus increased by 23.5 billion dirhams (or 22%) in one year, reaching 131.5 billion dirhams in H1-22", explains AGR. The surge in compensation spending has driven overall government spending to more than 165 billion dirhams, or +11.4%.