Morocco's foreign debt highest for years, economy growing

RABAT (Reuters) - Morocco's foreign debt reached its highest level since at least 1998 at the end of June, even as accelerating economic growth in the second quarter reduced its dependence on external financing. Foreign debt totalled 224.8 billion dirhams halfway through 2013, the finance ministry said on Tuesday, having risen from 212.7 billion dirhams at the end of 2012. Public foreign debt was equivalent to 25.7 percent of Morocco's gross domestic product at the end of 2012, the highest ratio for a decade. The ministry did not give a debt-to-GDP figure for the first six months of 2013. Successive crises, including that in the euro zone, the Arab Spring, and adverse weather that hit the agricultural sector, have dragged on the North African kingdom's economy in recent years, forcing it to borrow to cover its deficits. Earlier, the planning agency said Morocco's economy had expanded 5.1 percent in the second quarter from a year earlier, accelerating from the previous three months as the agricultural sector recovered from a drought. That helped reduce the country's need for external financing to 7.3 percent of GDP in the second quarter from 9.3 percent of output a year before, the agency said. The finance ministry said Morocco's treasury owed 122.5 billion dirhams to overseas lenders at the end of the first half, while guaranteed loans from foreign lenders to government institutions stood at 102.3 billion dirhams. The treasury accounted for 54.3 percent of all foreign debt, 45 percent was owed by state-owned firms, and another 0.5 percent by local government, the data showed. The treasury raised 5.6 billion dirhams overseas in the six months to June 30, including $750 million by reopening a $1.5 billion Eurobond in May, while other government institutions borrowed 6.5 billion dirhams in the same period. Total public debt, including domestic borrowing, was equivalent to 60 pct of GDP at the end of 2012, and the government aims to keep it at that level. The finance ministry said it expected foreign debt to fall slightly to $21.35 million in 2014, and to $20.96 million in 2015. GROWTH Tuesday's second-quarter GDP figure was higher than the planning agency's previous 4.3 percent estimate, made in July. In a statement, the agency said Morocco's earnings from agriculture had increased by 22.8 percent in the second quarter compared with a rise of 9.5 percent in the same period of 2012. Earnings from the non-agricultural sector rose 2.5 percent, less than the 4.5 percent increase seen a year before. Consumption by households, the economy's main driver, rose by 4 percent, with internal demand adding 3.3 percent to GDP. The economy grew by 4.8 percent in the first quarter. The planning agency expects a 4.4 percent expansion in 2013 as a whole, although it warned last month that higher energy prices were likely to hit consumer demand, dragging on growth this year and in 2014. Morocco raised energy prices last month, starting a series of unpopular reforms to subsidies, pensions and taxes demanded by the International Monetary Fund in return for a two-year, $6.2 billion precautionary credit line.