Morocco has regained investment-grade status from Standard & Poor’s (S&P), becoming the only African sovereign borrower currently holding the label with the US ratings agency.

S&P announced on Thursday that it had upgraded Morocco’s sovereign credit rating to BBB-/A-3, restoring a position the country lost in 2021 during the economic downturn brought on by the COVID-19 pandemic. The change is expected to lower borrowing costs for the kingdom and improve investor confidence.

Morocco had been rated BBB- until 2021, when it was cut to BB+ at the height of the pandemic. In March 2024, S&P shifted the outlook from stable to positive, paving the way for this week’s upgrade. The latest decision follows a mission to Morocco in September and reflects what the agency described as resilience in the face of successive shocks, including the pandemic, supply chain disruptions, and recent US trade tariffs.

The agency cited Morocco’s structural reforms and macroeconomic management, which have stabilised public finances while helping to diversify the economy. The improved rating aligns Morocco with international peers such as Hungary and Oman, at a time when many sovereigns are facing increased scrutiny. In May, Moody’s downgraded the United States, while France and Italy have come under pressure over fiscal concerns.

For Rabat, the regained status could attract further foreign direct investment as the government pursues infrastructure upgrades, energy transition projects and industrial development initiatives. The new label signals to bond markets that Morocco is a safer bet than many other emerging economies.

According to S&P, Morocco’s real GDP is expected to grow at an average of 4% between 2025 and 2028. The budget deficit is projected to narrow to 3% of GDP by 2026, while the current account deficit is forecast to remain at about 2% of GDP over the same period. The agency also pointed to reforms promoting economic diversification and formalisation as supporting factors.

Risks remain, however. Analysts warn that agricultural dependence, climate volatility, persistent inequality and concerns around debt sustainability could weigh on Morocco’s long-term outlook.

The upgrade is S&P’s second positive move on Morocco in under two years, following the outlook shift in March 2024. It also stands in contrast to the broader international trend of downgrades, marking a notable achievement for the kingdom in a challenging global environment.