While the bond market is experiencing a persistent blockage due to the strong demands of investors, preventing the Treasury from financing itself at times, the Wali of Bank Al-Maghrib revealed that the Central Bank plans to intervene on the secondary market to make it more fluid and thus provide liquidity to investors. An indirect way to relax the primary market.
These operations are totally possible in view of the statutes of Bank Al-Maghrib, indicated the Wali who specified that the intervention mechanism, the accounting treatment and the details of these operations have been locked.
Bank Al-Maghrib might thus intervene at any time if it deems it necessary. The Wali will not give any information, however, on the maturities targeted, the desired impact on the yield curve, etc…
As for possible interventions on the primary market, the Wali was categorical, totally ruling out this option which is similar to printing money.
The Wali’s announcements come at a time when Treasury financing conditions are increasingly tight on the domestic market, while the new 50 bp increase in the key rate decided on Tuesday will not help matters.
An external maturity paid on foreign exchange reserves
In addition, the Wali indicated that the balance of the LPL of 2 billion dollars was drawn by the government which finally decided to use it as a budgetary resource. The Kingdom also faced a significant drop in dollars during the month of December. This drop was repaid from the Kingdom’s currency reserves, including the LPL.
As for the IMF’s flexible credit line, Morocco might not have access to it if it wishes to use it until next March following the FATF visit scheduled for January to verify that Morocco’s positive commitments to exit from the gray list are effective in the field.
