Press Conference by the Governor of Bank Al-Maghrib June 23, 2026

Bismillahirrahmanirrahim. I also warmly thank you for taking the time to attend this press conference, which coincides with the board meeting we held this morning. During its meeting, the Board of Bank Al-Maghrib examined and approved the annual report on the economic, monetary, and financial situation of the country, as well as the bank's activities for the 2025 financial year. It then analyzed the evolution of the national and international situation and the bank's medium-term macroeconomic projections. On the international front, the context remains marked by the implications of the conflict in the Middle East, which has severely disrupted supply chains, heightened inflationary pressures, and exacerbated uncertainties surrounding the outlook for the global economy. The recent conclusion of a protocol agreement between the United States and Iran suggests a gradual normalization of maritime transport. But economic activity will continue to suffer in the short term from the fallout of this war. At the national level, the repercussions of this conflict are perceptible, particularly on the energy bill and fuel prices, which saw an annual increase in May. Taking into account this evolution and the expected rise in imported inflation overall, domestic inflation should show a clear acceleration while remaining at moderate levels in the medium term. Thus, after evolving around 0.8% over the last two years, i.e., 2024 and 2025, it would reach, according to updated Bank Al-Maghrib forecasts, 1.5% on average this year and 2.1% in 2027. Core inflation would be limited to 0.2% in 2026, mainly reflecting a contraction in the prices of its food component, particularly olive oil. In 2027, with the dissipation of this effect and the rise in imported inflation, it would accelerate to 2.9%. In the same vein, inflation expectations have remained limited. Experts from the financial sector surveyed during the second quarter of 2026 as part of Bank Al-Maghrib's quarterly survey expect an average rate of 2.2% over both the 8-quarter and 12-quarter horizons. On the economic activity front, the dynamic should continue this year thanks to very favorable conditions and the strengthening, albeit at a slower pace than previously forecast, of non-agricultural activities. Considering, firstly, the expected evolution of inflation at levels consistent with the bank's medium-term price stability objective, the consolidation of the economic activity dynamic, and the high uncertainty surrounding the international economic outlook, the Board deemed it appropriate to keep the key rate unchanged at 2.25%. It will continue to closely monitor the domestic and external situation and base its decisions, meeting after meeting, on the most up-to-date data. We will now proceed, as usual, first to the international environment. Global economic growth is expected to slow from 2.3% in 2025 to 3% on average in 2026 and 2027. The pace of activity would remain stable in the United States at 2.1%, supported by investments related in particular to artificial intelligence and by fiscal policy. In the eurozone, suffering heavily from the implications of the conflict in the Middle East and Ukraine, it would decelerate from 1.5% in 2025 to 1.1% in 2026, then settle at 1.3% in 2027. In China, after reaching the 5% target in 2025, growth would slow gradually to 4.4% in 2027, hampered by difficulties in the real estate sector, fiscal pressure, and a very unfavorable demographic situation. In India, it would decelerate from 7.5% to 6.6% in 2027. The rise in fuel prices and uncertainty will weigh on private consumption and investment. On the labor market, signs of easing continue. The unemployment rate will increase to 4.4% this year and then to 4.6% in 2027 in the United States. In the eurozone, it would continue to hover at historically low levels, i.e., 6.4% in 2026 before increasing very slightly to 6.5% in 2027, with widely contrasting levels from one member country to another. We will distribute my paper, and you will have the unemployment table for the most important European countries, which obviously have truly contrasting levels. Regarding international raw materials markets, oil prices would remain high given the damage to energy infrastructure and the rapid decline in stocks. The scenario retained by Bank Al-Maghrib is based on an increase in the cost of a barrel from $68 in 2025 to over $92 on average this year before a decline to $71.6 in 2027. For phosphate and its derivatives, driven by the surge in input costs, particularly sulfur and ammonia, the persistence of restrictions on Chinese exports, and strong demand, the prices of Moroccan origin should, according to the latest estimates from Commodities Research Unit, increase from $713 per ton in 2025 to $912 in 2026 before returning to $766 in 2027 for DAP, and from $529 to $648 then to $560 for TSP. In contrast, crude phosphate prices will fall slightly over the forecast horizon. Regarding food products, the FAO index would increase by 3.9% this year and 0.7% in 2027. At the level of inflation and on the international front, global inflation would accelerate from 2.9% in 2025 to 3.6% in 2026 before easing to 2.1% the following year. In the eurozone, it would come out at 3.1% in 2026, fueled mainly by the surge in energy prices, before returning to 2.2% in 2027. In the United States, it would continue to evolve above the Fed's target, standing at 3.7% this year and 2.8% in 2027. Regarding central bank decisions, following its meeting on June 10th and 17th, the ECB decided to raise its key rates by 25 basis points for the first time since September 2023. For its part, the Fed kept the target range for the federal funds rate unchanged at 3.5-3.75% during its meeting on June 6th and 17th, for the fourth consecutive time. Similarly, the Bank of England decided at its meeting to keep its rate at 3.75% for the fourth time in a row. Regarding macroeconomic prospects at the national level, inflation came out at 1.4% on average in April and May after 0.1% on average in the first quarter of 2026. This evolution essentially reflects the rise in fuel prices by 28% and the increase in volatile food product prices by 6.4%. Likewise, the decline in core inflation narrowed from 1.2% in the first quarter of 2026 to 0.5% on average in April and May. Conversely, the increase in regulated tariffs remained at 0.5%. After evolving around 0.8% over the previous two years, inflation, as I indicated in the introduction, would reach 1.5% on average this year and 2.1% in 2027. Core inflation would be limited to 0.2% in 2026, mainly reflecting a contraction in the prices of its food component, particularly olive oil. In 2027, with the dissipation of this effect and the rise in imported inflation, it would accelerate sharply to 2.9%. In terms of economic growth, according to Bank Al-Maghrib's projections, the growth of the national economy will accelerate from 4.9% in 2025 to 5.2% this year, then settle at 3.1% in 2027 due to the base effect. After an increase in 2025, agricultural value added will rebound by 16% this year, taking into account a cereal harvest estimated by the Department of Agriculture at 90 million quintals, before posting a decline of 56% in 2027 under the assumption of a return to an average cereal production that we estimate at 50 million quintals. For non-agricultural activities, the pace should consolidate to 4.2% on average in 2026 and 2027 after 4% in 2025. Regarding employment, we only have the results of the new labor force survey for the first quarter of 2026, published by the HCP. Employment against income stood at 10.4 million positions. The services sector is the main provider with a share of 49%, followed by agriculture, forestry, and fishing with 24.5%, industry 13.6%, and construction 12.7%. Taking into account the working-age population, the employment-to-income ratio stood at 37% nationally. This rate is particularly low among women, at 14.7%, and young people aged 15 to 24, at 16.6%. Furthermore, the number of unemployed persons in the strict sense stood at 1.25 million people, nearly 80% in urban areas, and the unemployment rate was 8.8% overall, 13.5% in cities, and 6.1% in rural areas. In total, the labor force, which includes people in employment against income and those in strict unemployment, stood at 11.6 million people, and the participation rate was 41.8% nationally, 43.3% in rural areas, and 41% in cities. That is all we have in terms of labor market statistics. We will have to wait, I believe, at least until the last quarter of 2026 for the HCP to reconstruct the complete statistical series for the coming years in order to allow comparisons between corresponding months and quarters. Regarding the external account, the surge in petroleum product prices, certain inputs, and the continuation of the investment effort should weigh on the trade balance. On the import side, the energy bill would increase by 26% to 135 billion dirhams in 2026 before returning to 114 billion in 2027. Acquisitions of capital goods would increase by 12.3% in 2026 and 9.3% in 2027, approaching 245 billion dirhams. On the export side, after a decline of 18% in 2025, shipments from the automotive sector would increase gradually to reach 191 billion dirhams in 2027, while phosphate and its derivatives sales would show an increase of 8.5% this year and 2.4% in 2027, reaching 110 billion dirhams. In parallel, travel receipts would continue their notable progression, rising from 138 billion in 2025 to 161 billion in 2027, and transfers would consolidate over the same period from 122 billion to 130 billion dirhams. Under these conditions, the current account deficit would widen from 2.4% of GDP in 2025 to 4% this year before easing slightly to 3.8% in 2027. Regarding foreign direct investment receipts, the outlook remains surrounded by high uncertainty due to the situation, of course. Projections are based on an annual flow equivalent to 3.5% of GDP. Taking into account, in particular, the external financing planned by the Treasury, official reserve assets would continue to strengthen, reaching 542 billion dirhams in 2027, ensuring the equivalent of 6 months and 9 days of imports of goods and services. Regarding monetary conditions and bank credit, quarterly assessments carried out by Bank Al-Maghrib indicate that the value of the national currency remains broadly aligned with economic fundamentals. The real effective exchange rate should, after an appreciation of 2% in 2025, depreciate by 3.6% this year and 0.8% in 2027, mainly due to a relatively low inflation rate in Morocco compared to the inflation of partners and competitors. The table in the note that will be distributed to you gives the details of these elements. Regarding the acceleration of bank credit to the non-financial sector, it increased by 8.1% in April, driven mainly by loans to private companies. Taking into account the expected evolution of economic activity and the banking system's expectations, its pace should see a clear acceleration, rising from 4.8% in 2025 to 6.8% this year and 6.1% in 2027. In terms of public finances, the budget execution for the first five months of the year shows an 8% increase in ordinary revenues and a 12.2% increase in overall expenditure, essentially reflecting an increase in spending on goods and services and debt interest. Taking into account the actual figures from the 2026 Finance Law and the 2026-2028 triennial budget programming, as well as the government's opening of supplementary credits amounting to 20 billion dirhams, the budget deficit excluding state shareholdings should, according to Bank Al-Maghrib's projections, ease from 3.5% of GDP in 2025 to 3.4% this year and 3.3% in 2027. So it is a downward trend that is limited but very contained: 3.5%, 3.4%, and 3.3%. Regarding fiscal consolidation, Treasury debt should gradually decrease, from 66.6% in 2025 to 65.1% in 2027, or 1,260 billion dirhams. Its domestic component would fall from 49% of GDP in 2025 to 47%, or 909 billion dirhams, and its external component would increase from 10.4% in 2025 to 18.1%, or 351 billion dirhams. I think I have covered all the elements that allowed the Board to base its decision to maintain the central bank's key rate. And now, as usual, we will move on to your questions. As usual, right, left, a woman before a man, that's our rule. You there, remember your name and who you represent, so that your colleagues and I can follow. Let's go.

Good. Let's go. Good question. Regarding MRE transfers, you are right. The relay function of Moroccan banks established in Europe was called into question by a law that passed through the European Parliament in June of last year. After Brexit, they wanted to prevent English banks from having the European passport and continuing, but since the provision is general, it also affected our banks. Obviously, we reacted with a task force led by the Ministry of Foreign Affairs, the most essential systemic Moroccan banks that have activity there, and ourselves with the Treasury Directorate of the Ministry of Finance to tackle the problem head-on. We held discussions first with the European Commission, the FISMA directorate, and the directorate told us that it left it to national legislations to transpose the provisions of the European law into their regulations, and that it was up to us to contact the countries concerned to try to better clarify their position on this point. So we tackled the problem with France because it is the main area of activity for our banks regarding MREs, and we practically reached an agreement that does not at all call into question the relay activity. Now we are tackling the other countries. We started with the Netherlands, Belgium, we have scheduled Spain and Italy. So each country has already informed us of its interpretation. We do not despair. The way we handled things with France was useful but probably not sufficient for the other countries. Each being sovereign, they transpose as they see fit. But the task force is carrying out a very thorough, almost harassing action to also assert the reciprocity of interests that bind these countries to Morocco in general. I think we will succeed positively. It will take time. I think it will likely take us through the year 2026. As you referred to the evolution of transfer volumes, which is increasing, I think there is no reason to worry at the moment, as the impression we have is rather positive from the initial discussions we started with the Dutch and later with the Belgians, etc. Regarding your question on growth, indeed, growth is driven. The figures of 4.9%, 5.2% in 2026, and 3.1% in 2027, which I gave you, are driven until 2030 by the investment effort, but it is not said that this public sector investment effort will contract. There are things that will even extend beyond 2030, likely in terms of achievements. There is also what is within the framework of the national accounts and is very important: the investment of public enterprises. We must not forget that OCP has a very heavy program of at least around twenty billion dirhams per year. There is no reason why OCP cannot continue its investment effort beyond 2030, especially if strategic orientations like green hydrogen are programmed. So there are still margins that will need to be realized. But I said it here the other time, perhaps even the time before, what we wish for is the awakening of private investment. All the ingredients are there. The PPP law is there. Moreover, it has worked well regarding investment in desalination, with foreign and Moroccan investments. There is no reason why it cannot work in other sectors. There is, of course, the investment charter, the CRI have done their job. There is also everything that was planned following His Majesty's call regarding territorial disparities and the volume allocated to this area. I think that if you put all these elements together, if one decreases a little, others will take over. The territorial aspect, you see the figure announced: 240 billion over several years, but it can take over. The essential element that we say is that we believe there is room for private investment to also contribute to going beyond this 2030 horizon. I will tell you that we are planning a tripartite meeting between the GPBM, ourselves, the Ministry of Finance, the Ministry of Investment, the GPBM, and the CGM to put things on the table and see if there is more to be done. We are already looking a bit at this orientation. We have already put in place a whole charter concerning very small enterprises, which has been supported doubly by the Ministry of Commerce and Industry, which held a launch meeting recently for this category, which represents over 90% of the Moroccan entrepreneurial fabric. And we must add the Hassan II and Mohammed VI Fund, which will also hold a meeting in the coming days here in Rabat at the Sofitel to outline what it intends to do as part of its participation in private investment, particularly concerning SMEs and VSEs. So I think that when you see all these tools put in place, which are complementary to each other, there is no reason, if the music is played well, that beyond the 2030 horizon, the elements that contribute to investment and therefore to growth will be there to take over. There you go.

No, I will tell you. What we are truly trying to counteract is that financial flows remain in Europe. That the financial flows of our Moroccans living abroad come as they come here, can be placed in Moroccan accounts, feed Moroccan companies, and also contribute to investment as a category that can participate in investment, and not be blocked by regulations that could hinder them in this historical movement. What we are trying to do is ensure that there is no orientation to block this relay operation and to prevent obstacles from being put in place, because there are several obstacles. They can ask you for endless paperwork to attest to your income, to attest that you have paid your taxes where you are, etc. They can bother you as much as they want. That is why we started with France to identify all the points that could constitute bottlenecks or choke points for this relay operation compared to what was done previously and in relation to the new EU law and its application to all countries where our Moroccans are located, particularly the Netherlands, Belgium, Italy, and Spain. So it is clear for us. We have checked all the boxes with France. We will check all these boxes with each of the countries in order to ensure that the financial flows concerning MREs are not hindered and can continue in the most normal way, as before, to land in accounts here in Morocco. And regarding the transmission of key rates by banks, we see that the rates applied by banks remain high. For example, real estate loans are around 5.13%, which is still high. So, do you think that banks are not making enough effort to transmit the monetary easing carried out by the central bank? I will tell you. In the document we will give you, the latest quarterly survey shows that when we started the key rate hikes and then the cuts, we made 75 basis points in cuts. We are now at a 77% decline in banks' lending rates. Obviously, it is not the same for individuals compared to businesses, but you must not forget the case of real estate. Real estate credit is long-term credit. It is credit over 20 years. You are not going to give a 20-year loan at a rate that would put the bank at interest rate risk itself. It's very simple. For the 5.43% you cited for real estate, if you apply it over 20 years, there is an interest rate risk. That is why you should not just look at the rate itself and say, 'Oh, for real estate it's above 5%, but it's over 20 years.' It's over 20 years. A loan over 20 years. If you have inflation that remains controlled, and that is our role as a central bank, I think these are still favorable conditions over 20 years. Honestly, right? Yes.

Yes. Regarding inflation targeting, we are fully on track. I don't remember if I have note 16 or note 17 in mind. So, gradually, we are updating the notes to see where we stand. We are currently in a period of awareness-raising and almost training of the various categories one after the other. We held a first meeting here with financiers, academics, etc. Now we are moving on to other categories, namely the private sector. This is one of the points we will discuss at the meeting I mentioned with the CGM, which I hope we can hold before the end of the year, and to prepare a sort of memorandum for the incoming government, which will come in principle in September or October. So, consequently, it is to prepare all this a bit. I have no concerns. The file is going well. We have both the technical assistance of the International Monetary Fund and now the peers who have preceded us in targeting and with whom we are in partnership. So we have two banks with which we have already held some video conferences, and one where it will be in person, I think it is Chile. We will have an in-person cooperation to finalize the entire file. We plan to present the file to the board in all its components in September, and we can do a dry run in December and pave the way for official targeting starting next year, touch wood. Hoping that there won't be another crisis to disrupt this schedule. But the schedule is proceeding quite normally, and we are confident in the steps we have taken. Quite honestly. We are also preparing our staff. We are also preparing our staff at the regional level so that they can answer certain questions.

A number of elements—particularly regarding communication—appear extremely important to us, and we are deepening the implementation of our communication policy for inflation targeting. Regarding the current account, a 4% deficit does not seem alarming to me because after 4 we start to descend. We estimate that what deepened it was the energy bill. The big problem is the uncertainty surrounding the fragility of the agreement. One morning they tell you it's great, everything is set for the next two months, then they say maybe it's time to attack again. That uncertainty weighs heavily. If the agreement fails and the deficit persists, we will face problems not just of prices but of supply. For example, sulfur for OCP exceeded $1,000 per ton; half of OCP's sulfur imports go through the Strait of Hormuz, so its TSP activity would need to be revised. So we monitor exports of cars, phosphates, and energy. Those are the three or four items, plus FDI. We are lowering the percentage relative to GDP because concerned countries will focus on rebuilding their infrastructure, and some will participate in reconstructing damages in Iran. If the cause holds, the deficit will come down by 2027. What matters to us is our foreign exchange reserves. We are currently above 6 months of import cover, and even in 2026 we would end at 6.5 months, and in 2027 at 6 months and 9 days. That is very comfortable, and as we implement inflation targeting, it is interesting to have more substantial reserves than in the past.

(Laughs) Let me tell you: when you read the 2025 report that we will present to His Majesty, you will see certain points. The government must decide its priorities. Regarding support, we have a platform where citizens give their observations to the General Secretariat of the Government. We are now in the second phase of discussing the data received. On Bitcoin, way back in 2017 when it started rising and falling, we issued a warning. We told people to be careful. Now the crypto space is full of speculation, but our framework remains cautious.

Tariffs are still long and deep. I saw a paper from the US State Department analyzing the agreement. It says they did not take into account that tariffs can be used as a weapon. For us, we need to know that negotiations are fundamental. The agricultural season is positive, with good rain. Cereals are present, but not as essential as the overall agricultural sector. This year, olive oil production is exceptional—49% higher. You see the impact on inflation. After this agricultural sector, we see its effect. For the commercial deficit, we have equipment. The automotive sector is in crisis in Europe, and we fear that crisis will hit us in 2026 or 2027. Regarding the 4% deficit, it will persist if the tariff situation continues. But what matters is our reserves, which remain comfortable.

Yes. This support is within a specific context; we are not alone in the world. But it is not a structural policy. When the context passes, we must move away from this approach. What we emphasize is that employment must be driven by sustained growth. This cannot remain in this form; it must involve the private sector.

There is a difference between inflation as calculated and inflation as felt. When you calculate, it's 5%, but when you go to the market, the prices have increased more. Level of prices is different from inflation. For example, meat is still at 120 dirhams. But other items have decreased. The economic literature discusses the gap between felt and calculated inflation. In the US, they feel it more at the pump and on food. For us, we have to anchor expectations. The objective is to manage expectations. There is also the issue of the social contract and the need for the state to prioritize. The decision to remove subsidies must be well-timed and focus on real needs, not just the wealthy.

We have completed the scoring system for credit bureau and presented it to the banks. We are now fine-tuning it based on their feedback. The scoring was essential for TPEs. The second element is the education and support aspect, which we are working on with Morocco SME. We expect their offer by early July. As for Revolut, I received their executives in early June. They expressed interest because of Morocco's growth prospects and as an African interface. I told them we have three major priorities: the ongoing issue with the European clearing system, the IMF and World Bank evaluation due at year-end, and the FATF evaluation. These take precedence. I told them we need to solve these first; they understood and said they would revisit in a few years. They did not ask for a license.

First, on the dirham: the depreciation reflects the inflation differential with competing countries. You will see the details in the note we distribute. For the broader question: the most difficult is the recurrence of crises since 2008—18 years of permanent crises, each with its own specificity. Then there are internal challenges: climate change with recurrent droughts, fundamental paradigm shifts in our work (digital, AI, cybersecurity) that require rapid adaptation. Sometimes we give inadequate responses and then realize we need to think better. Example: crypto and central bank digital currencies. Initially everyone rejected them, including me. But then we understood that if the public authority does not act, a private external entity will impose its rules. So we must be agile, adaptable, and innovative. Trust in teams and national elites is key. And also humility—we work with inexact sciences. You can't reduce 37 million Moroccans to equations. Experience teaches humility. It is necessary to adapt quickly and have the courage to admit mistakes.

No, we monitor this. Beyond a certain period, we require banks to transfer these funds to the Caisse de Dépôt et de Gestion (CDG). The CDG holds them for a time until the rightful owner or heir proves the succession in due form. Eventually, they go to the Treasury, as is done in many countries. I don't think the percentage is that high; I'll verify it from memory. But we have this mechanism in place.

God bless you. May God help you all.