We believe Morocco's fiscal and external deficits will narrow markedly over the medium term on the effects of countervailing policy measures and a gradually improving external environment. We are therefore affirming our 'BBB-/A-3' long- and short-term foreign currency sovereign credit ratings on Morocco. We are lowering our long- and short-term local currency ratings on Morocco by one notch to 'BBB-/A-3' to equalize them with the foreign currency ratings. This reflects our view that the transition to a more flexible exchange rate regime will take longer than we previously envisaged. The outlook remains negative, reflecting our view that there is at least a one-in-three likelihood of a downgrade if fiscal and current account deficits do not narrow significantly and sustainably over
