The International Monetary Fund urged Morocco's central bank on Wednesday to set an inflation target as upward pressure on commodity and food prices fades.

Annual inflation eased to 6.1% last year from 6.6% in 2022 and the central bank, known as Bank Al Maghrib, expects it to slow still further to 2.4% this year due to a fall in prices of imported goods and increased stability in food markets.

"As inflation continues to fall, Bank Al Maghrib should resume its transition to an inflation-targeting framework," the IMF said in a statement marking the end of its current mission in the North African country.

The central bank left the benchmark interest rate of 3% unchanged during its last board meeting in December, a stance the IMF said was appropriate.

The IMF urged the Rabat government to improve its tax revenue to reinforce “fiscal consolidation” in the medium term, as it broadens access to social welfare.

Reforming state-owned enterprises, increasing the private sector's role in investment, fighting corruption and addressing anti-competitive practices should boost job creation, it said.

Morocco's unemployment rate rose to 13% in 2023 from 11.8% a year earlier as the farming sector continued to shed jobs due to a drought, according to state statistics agency HCP.

The government's plan to improve infrastructure was essential to reducing water scarcity, together with a reworking of water tariffs and further efforts to improve efficiency in the usage of water resources, the IMF said.

"Recent and planned progress in liberalising the electricity market should encourage the transition to renewable energy."

The IMF expects Morocco's economic growth to rise gradually to around 3.5% in the medium term thanks to stronger domestic demand and a rise in exports and investments.

(Reporting by Ahmed Eljechtimi; editing by Mark Heinrich)