RABAT- The IMF has approved financing of about $2.97 billion in the form of a Precautionary and Liquidity Line (PLL) to help Morocco ward off external economic shocks.

"The new PLL arrangement will provide insurance against external shocks and support the authorities’ efforts to further strengthen the economy’s resilience and promote higher and more inclusive growth," the IMF Executive Board announced on Monday.

The two-year arrangement will help lower the ratio of public debt to GDP over the medium term while securing priority investment and social spending, the IMF said on its website.

Under this arrangement, Morocco can access about $1.73 billion in the first year, it said, adding that the authorities intend to treat the new arrangement as precautionary, similar to its previous three PLL arrangements.

Morocco’s first PLL deal for about $6.2 billion was approved in August 2012. It then received PLL arrangements in July 2014 for $5 billion, and in July 2016 for $3.5 billion.

"The PLL was introduced in 2011 to meet more flexibly the liquidity needs of member countries with sound economic fundamentals and strong records of policy implementation but with some remaining vulnerabilities," the IMF said.

Morocco’s treasury debt-to-GDP ratio for 2019 is expected to rise to 67.1 percent in 2019, up from 66.7 percent in 2018 and 65.1 percent in 2017, according to Finance Ministry data.

The ratio of public debt to GDP stood at 91.2 percent in 2017, with the government planning to reduce it to 60 percent in 2021.

(Reporting by Ahmed Eljechtimi; Editing by Kevin Liffey) ((ahmed.eljechtimi@thomsonreuters.com;))