By raising 27 billion dirhams in foreign currency on the international market, the Treasury considerably eased the pressure on the domestic debt market, putting an end to the upward trend in rates. Lightings.

The recent Treasury bond issue on the international market of 27 billion dirhams constitutes a comfortable cushion to start the year 2021, estimate analysts at Attijari Global Research (AGR). This record increase in currencies is also likely to ease the recent pressure on bond rates .

This operation would allow the Treasury to largely finance its needs by the end of the year, indicates AGR in its last “Budget focus”, under this title: “International exit: the domestic market takes its breath back”.

AGR analysts therefore predict "a reversal of the upward trend in rates due to a much less pronounced recourse by the Treasury to the domestic market".

Last Tuesday, during the last Treasury auction session on the domestic market, this reversal of the upward trend in rates was confirmed: the 52-week rate fell by 24 basis points, while the 2 years fell 31 basis points.

Foreign debt rises by 25%

In a context marked by a widening of the budget deficit at the end of 2020, the increase in Treasury debt should continue to reach 831 billion dirhams, at the end of this year, estimate AGR analysts.

Domestic debt is expected to reach 628 billion dirhams in 2020, up 7.1% from its level observed in 2019, while the Treasury's external debt would increase by 25.4% to 203 billion dirhams. Taking into account the two outflows of the Treasury abroad in 2020, external financing should exceed the level provided for by the amending finance law, i.e. 43.6 billion dirhams.

Thus, the share of external debt should exceed 24% of the overall Treasury debt in 2020, against an average of 21.4% during the 2017-2019 period.

This significant increase in foreign currency debt does not worry AGR analysts. “Despite this acceleration in foreign currency financing, the weight of external debt in the Treasury's overall indebtedness in 2020 remains in line with its reference benchmark. This stands at 25%-75% between external and internal indebtedness,” they point out.

Similarly, AGR points out that given a negative "scissor effect" between the extension of the Treasury's debt in 2020 and the contraction of nominal GDP during the same period, the Treasury's indebtedness should considerably exceed the levels recommended by the convergence criteria, i.e. 60% of GDP. Indeed, the Treasury's debt ratio is expected to exceed, according to estimates, the 78% threshold in 2020 after settling at 64.9% in 2019, indicates the same source, recalling that it would have already reached 76.1% in November 2020.

Relative to GDP, domestic debt should grow by 8.2 points to 59.1% in 2020, while the external debt ratio should rise above the 19% threshold in 2020.

By Amine Kadiri