The amount has been approved under the Precautionary and Liquidity Line (PLL).
Introduced in 2011, the PLL is meant to meet liquidity needs of member countries with sound economic fundamentals and strong records of policy implementation but with some remaining vulnerabilities.
(READ MORE: Economic prospects for Africa promising: IMF)
The access under the arrangement in the first year will be equivalent to about 4.5 billion US dollars, rising in the second year to a cumulative five billion dollars.
According to the Moroccan authorities, the arrangement will be treated as precautionary just like what the country did in the 2012 PLL.
“The PLL arrangement will allow the authorities to pursue their home-grown reform agenda aimed at achieving rapid and more inclusive economic growth while providing them with useful insurance against external shocks,” said the IMF.
Noayuki Shinohara, IMF’s deputy managing director further added, “Morocco’s sound economic fundamentals and overall strong record of policy implementation have contributed to a solid macroeconomic performance in recent years.”
Shinohara added that authorities have been consolidating Morocco’s fiscal position while pursuing an agenda of structural reforms to address vulnerabilities, strengthen competitiveness, and promote higher and more inclusive growth.
“Despite a difficult external environment, the authorities made important strides in reducing vulnerabilities, rebuilding policy space and addressing medium-term challenges over the course of the first arrangement supported by a PLL.”
The IMF also added that the significant progress made in reforming the subsidy system was commendable.
“The authorities are committed to further reducing fiscal and external vulnerabilities while laying the foundations for higher and more inclusive growth,” added Shinohara.
“To achieve these goals, it will be important to control expenditure as well as advance major reforms, including those of subsidies, pension and the tax system.”
IMF says the timely adoption of a new organic budget law will be essential in order to strengthen and modernise the budget framework.