Morocco’s external debt service surged to an unprecedented level in 2024, mirroring a global trend in which governments are grappling not with new borrowing, but with the rising cost of servicing old debt, according to the World Bank’s latest International Debt Report.
Although lower-income and emerging economies slowed the accumulation of external debt last year, interest payments worldwide climbed to a record US$415.4 billion. The World Bank warns this surge underscores a shift: the biggest pressure point is no longer borrowing volumes, but the increasingly expensive burden of meeting repayment obligations.
Morocco typifies this pattern. The country’s total external debt stock dipped slightly from US$69.63 billion in 2023 to US$67.99 billion in 2024, the second-highest level in its history. Yet its debt service bill soared, with repayments on long-term external debt alone reaching a record US$7.02 billion.
The figures highlight a structural change in global borrowing since the COVID-19 pandemic. Governments not private firms have become the dominant borrowers, accounting for nearly 60percent of long-term external debt across lower- and middle-income countries (LMICs) in 2024. Public-sector financing has increasingly been used to protect growth, support recovery and stabilize national budgets amid weak private investment.
Morocco fits firmly into this trend. Of its US$57.20 billion in long-term external debt last year, US$45.72 billion was owed by the public sector. Private nonguaranteed borrowing stood at US$11.47 billion, reflecting limited appetite for external financing among domestic companies and continued reliance on state-backed loans.
At the same time, global borrowing conditions remained tight. While international bond markets reopened partially in 2024, offering governments renewed access to external finance, the cost of issuing debt stayed high. Many countries refinanced maturing bonds or plugged fiscal gaps at interest rates around 10 percent nearly double pre-pandemic levels. The regained access provided short-term relief but locked borrowers into more expensive obligations, intensifying future repayment pressures.
Morocco’s gas strategy
Morocco’s strategy over the past year has been guided by risk management rather than expansionary borrowing. Short-term external debt considered more vulnerable to rollover risks and global market volatility dropped steeply from US$10.16 billion in 2023 to US$7.50 billion in 2024. Instead, authorities relied more heavily on longer-term commitments and domestic financing to stabilize external exposure.
New long-term external disbursements climbed to US$8.61 billion in 2024, up from US$6.43 billion the year before. The public sector accounted for US$6.86 billion of this amount, underscoring the central role of government-led borrowing in managing fiscal and balance-of-payments needs. These inflows helped Morocco navigate an uncertain global environment, easing immediate liquidity constraints.
But the cost of stability is rising. Interest payments on Morocco’s long-term external debt reached US$1.79 billion last year, while principal repayments totalled US$5.22 billion. Combined, the country’s long-term debt service climbed to an unprecedented US$7.02 billion, tightening fiscal space at a time when global institutions warn of mounting social demands.
The World Bank cautions that for many developing countries, the rapid rise in debt service is already squeezing essential spending on health, education and social protection. While Morocco remains in a stronger external position than many of its regional peers, the country is not immune to these pressures.
Key sustainability indicators remain relatively solid. Debt service absorbed 13 percent of export revenues in 2024, while the external debt stock represented roughly 44.7% of gross national income. Morocco’s foreign reserves cover more than 54 percent of its total external debt a sizeable buffer by global standards.
Yet the broader picture is sobering. Even as new borrowing moderates, the financial weight of old loans continues to intensify. The global shift toward higher interest rates, longer-term obligations and tighter market conditions is leaving countries like Morocco with narrowing policy room.
As 2025 unfolds, Rabat faces a delicate balancing act: maintaining access to international capital markets, protecting foreign reserves, and absorbing higher debt-service costs — all while safeguarding growth and social spending in an increasingly constrained financial environment.
