Government spending has been picking up in recent years through both increased revenues and increased debt issuance. It could continue to do so after the government’s announcement of higher spending in public sector, following protests in fall 2025 demanding better public services, especially health. Debt service remained below the African average, at around 3.7% of GDP in 2025, and is projected to decrease closer to -3% by 2027. In March 2025, Morocco issued two EUR2bn Eurobonds, with 4 and 10Y maturities, aiming to boost public spending ahead of the sporting events taking place in the country in the next five years.

The debt-to-GDP ratio hit 70% in 2024 and has been on the decline since. It is expected to reach 65% by 2027, though the decrease is expected to be smaller than previously considered. Morocco has also been fiscally prudent, with deficits expected to average -3% of GDP through 2027. S&P upgraded Morocco to investment grade in September 2025, alongside peers such as Hungary and Oman. The deficit is projected to continue at a similar level, growing from an estimated 4.2% of GDP in 2024 to 4.9% in 2025. Spreads performed very well in 2025, with the 10Y government bond yield around 4.1% below US 10Y. However, several state-owned enterprises continue to be highly indebted and pose a risk to the outlook. The government has announced plans to reform them.

Morocco’s central bank decided to keep its interest rate on hold at 2.25% in its final meeting of 2025, against some expectations, confirming its cautious path ahead as it plans to move the Moroccan dirham towards a full flexibilization in 2026. It is currently pegged in a EUR-USD basket with a fluctuation band of ±5. In 2025, the dirham appreciated by 9% against the USD, while slightly depreciating against the euro. International reserves are currently at a record high, given increased foreign direct investment, tourism income and robust remittances that persist at record levels.

Phosphates, Morocco’s main export, turned the corner in 2025, growing by +20% y/y after a slowdown since the Covid-19 pandemic. Sales mainly came from raw phosphate exports. Morocco has an important opportunity from increasing the value added of its exports domestically. In 2026, growth is projected to continue as global demand remains due to the strategic role of phosphates in food security. Energy costs are projected to continue on a downward trajectory. Automobiles follow phosphates as the top Moroccan export. The North African economy is currently among the top car exporters to the EU, exporting more than 500k cars in 2023, similar to China, Japan and South Korea. Morocco's successful car industry follows years of investment by European carmakers like Renault and Stellantis, aiming to boost cost competitiveness and mitigate the risks associated with offshoring. In early 2025, automobile exports experienced a slowdown due to European market dynamics and US tariffs impacting the overall auto industry, though production in the country remained strong. 

The main risks to the outlook are political and especially acute from social mobilization. In October 2025, the country faced Gen-Z mobilizations calling for better health and public services. In response, the government announced increases in education and health spending. The 2026 budget bill presented to Parliament slightly reduces the overall budget but increases social spending. The bill also incorporated increases in corporate income tax receipts. Legislative elections are scheduled to take place in September 2026. Though not much policy change is expected, they are the political event to follow after last year’s protests.  Finally, Morocco is highly vulnerable to climate risks due to relevance of agriculture to employment.

Morocco is actively pursuing a decades-long development plan to elevate its income level from low-middle income to higher-middle income. While the plan does not have the same capital resources as those of the Gulf nations, it focuses on diversification, attracting investment and renewable energy as key priorities. A significant portion of spending is allocated to large-scale projects, though health and education, especially in non-urban areas (35% population), remain poor. 

The budget also includes funds for the development of the Atlantic pipeline or a potential new LNG hub. On the renewable energy side, the government has focused on attracting solar and green hydrogen investments, in line with the EU's energy transition goals. 

France's recently recognized the autonomy of the Western Sahara under Moroccan authority, a position first taken in 2020 by the first Trump Administration. Rabat and Washington have enjoyed strong relations under Trump. In late 2025, the Trump Administration backed two Moroccan firms to produce key chip materials domestically.