BAM and BM state that “Natural disasters could affect real estate, business assets, household wealth and business profits”


Bank Al-Maghrib (BAM) and the World Bank (WB), in a joint report, state that “Natural disasters could affect real estate, business assets, household wealth and business profits, which could reduce the ability of borrowers to service their debt.

Agricultural producers and livestock breeders could suffer significant economic losses due to droughts, a natural risk to which Morocco is particularly vulnerable, banks exposed to the agricultural sector could be directly affected by physical climatic risks. Banks exposed to other sectors linked to the agricultural sector via the value chain (e.g. agribusiness and tourism) could also be affected (see annexed article). In addition, in the event of severe drought, other sectors may also be affected, for example when economic conditions impose restrictions on the use of water.

This may involve updating the risk analysis if necessary and conducting a more in-depth exercise with the banking sector. That said, in order to improve and expand risk analysis, it will be important, according to the report, to improve the quality and granularity of data available to conduct risk assessment.

This will require working with the banking sector to improve its data capabilities and encourage it to engage with customers to obtain all the data required.

The Central Bank’s work to develop guidance on climate-related reporting will be a key element in this regard. It could also help develop indicators to monitor key climate risks, both at an institutional and systemic level. “The continued focus on strengthening institutional capacities will support the periodic review and management of the main climate risks identified,” recommends analysts from the two institutions.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button