A. Was the Fiscal Strategy Appropriate?

8. The 2014 PLL arrangement envisaged a further reduction in fiscal vulnerabilities through medium-term consolidation while preserving growth. The authorities’ objective was to achieve a fiscal deficit of 3 percent of GDP by 2017 that would help gradually reduce the public-debt-to-GDP ratio to 60 percent by 2019. Fiscal adjustment was to be achieved mainly through expenditure rationalization—notably the reduction in subsidies and the gradual moderation of the public payroll—while making space for higher pro-growth, pro-equity spending on investment in infrastructure and human capital. Several structural reforms accompanied these efforts. The tax reform strategy did not place a large weight on additional revenue mobilization, with Morocco already having one of the highest tax-to-GDP ratios in the region. In line with the recommendations of the April 2013 national tax conference, reforms to the tax system sought to gradually widen the tax base, contain tax expenditures, and improve its overall fairness and competitiveness. The civil service pension reform launched in June 2014 was to reach a first milestone in 2015 with the adoption of parametric changes aimed at improving and prolonging the viability of the Caisse Marocaine de Retraites (CMR). In parallel, the budgetary framework was to be strengthened through the adoption of a new OBL.

9. Fiscal balances improved during the second PLL arrangement. The end-2016 fiscal deficit envisaged at the end of the arrangement (July 2016) was 3.5 percent, down from 4.9 percent in 2014 and was in line with the program target. The cyclically-adjusted primary balance was also estimated to have improved by 1.6 percent of GDP by 2016, reflecting improvements in discretionary policy (Table 2). However, the actual end-2016 deficit was considerably higher due to tax revenue shortfalls, higher capital spending, and higher subsidies. While the end-September 2014 deficit indicative target was missed by 0.7 percent of GDP, mostly reflecting a frontloading of transfers to public entities, reimbursement of VAT credits, and higher spending on investment, the 2014 annual fiscal deficit objective of 4.9 percent of GDP was met. The authorities also took corrective action in 2015 in the face of unforeseen declines in grants and VAT revenues on imported goods by rationalizing expenditures and increasing non-tax receipts. All other indicative fiscal targets were comfortably met.

10. Subsidy reform continued and represented a major achievement for the authorities’ program. Following the elimination of gasoline and fuel subsidies in February 2014 and diesel subsidies in January 2015, a full liberalization of liquid fuel products took place in December 2015 as planned. These actions, helped by falling international oil prices, resulted in a reduction in subsidy spending of 2.3 percentage points of GDP between 2014 and 2016. The liberalization of fuel prices not only contributed to fiscal consolidation, but also marked an important structural reform going forward by shielding the budget from international oil price volatility.

11. Fiscal policy was directed towards ensuring job-rich growth. In this regard, social protection for the most vulnerable groups was broadened. This was primarily achieved through the Social Cohesion Fund in the context of programs such as RAMED (health sector) and TAYSSIR (education sector). Investment spending over-performed from a programmed 6.2 percent of GDP in 2014 to 7.3 percent of GDP in 2015. For 2016, the projected end-program performance suggested an investment deceleration to 6.8 percent of GDP, or 1 percentage point of GDP less than envisaged by the program, but the end-2016 result met the initial spending target of 7.8 percent of GDP.

12. Several reforms were also implemented to achieve the objective of bringing the public payroll below 11.5 percent of GDP in the medium term. These included the introduction of contractual employment and increased personnel mobility across ministries. In turn, the wage bill declined from 12.7 percent of GDP at the end of 2014 to 11.9 percent of GDP two years later. However, a comprehensive reform of the civil service is still needed to generate savings on public wage spending while increasing the efficiency of public services. Although with a delay, progress was made on pensions reform, where the reform of the civil service pension system was adopted in June 2016, even against the background of elections, and implementation began in September 2016. A broader structural reform will be needed to ensure the sustainability of the overall pension system, including through the merging of the existing funds into one public and one private fund, as envisioned at the beginning of the PLL arrangement.

13. Overall, the fiscal strategy appropriately balanced the need to bring down the debt-to-GDP ratio in the medium term with the need for investment, social protection, and inclusive growth. The PLL arrangement did not target a reduction in public debt over the period 2014–16. Instead, the focus was on putting the debt-to-GDP ratio on a downward path after its expected peak in 2015, gradually reducing it toward 60 percent of GDP by 2019. Total public sector debt increased broadly in line with objectives during the period of the arrangement, and risks to gross financing needs and the debt outlook improved (Figure 1). Implicit in the strategy was that the envisaged fiscal consolidation would have a limited impact on growth, because an assumed relatively low fiscal multiplier of current expenditures in Morocco.⁴ Although it was explained in the 2015 Article IV report, this assumption could have been covered more prominently in the staff reports related to the PLL arrangement. The staff reports could have also discussed in more detail the composition of investment spending in infrastructure and human capital that accompanied the program.

14. A critical discussion of the tax performance under the PLL arrangement would have been beneficial. Although the reform package sought to be revenue neutral, the tax-to-GDP ratio declined during the PLL arrangement, reaching an estimated 21.7 percent of GDP by mid-July 2016 compared to a programmed 22.7 percent of GDP in 2014, resulting in less fiscal space for social and investment spending. In part, this development is explained by an acceleration of VAT refunds consistent with the objectives of the reform, but more analysis would have been needed to understand the full range of determining factors, whether related to tax administration or policy design.

B. Did the Organic Budget Law Improve the Budget Framework?

15. The adoption of the OBL in 2015 was a positive step in strengthening the budget framework. The OBL brought substantial improvements through several new features, such as the introduction of multi-year and program budgeting, a fiscal “golden rule” (limiting new borrowing to the financing of investment spending and debt amortization), performance management, and strengthened transparency. The OBL also introduced provisions that make binding the ceilings on the wage bill and limit the carry-over of investment appropriations from one budget to another, therefore addressing the weaknesses that caused the end-2012 fiscal slippages.

16. Most of the OBL provisions entered into force in January 2016. This includes those provisions related to fiscal performance management and transparency, and parliamentary oversight and approval. The remaining provisions, including for multi-year budget and programming, making ceilings on wage expenditure appropriations binding, and limiting the carryover of investment appropriations, are to be gradually introduced by 2020. Therefore, the regulatory measures taken since 2013 to limit risks related to the carryover of investment appropriations and the wage bill are being rolled over until the relevant provisions in the new OBL take effect.

17. To further reduce fiscal risks, some OBL provisions could have been more aligned with international best practice. Potential vulnerabilities remain with respect to possible fiscal slippages on investment spending which could have been reduced, for example, by imposing a lower limit on the roll-over of credit appropriations (the law allows for a 30 percent limit compared to 3–5 percent internationally). A rule with a more comprehensive fiscal target could also be more effective in helping achieve broad fiscal objectives than a golden rule which focuses on limiting borrowing for investment purposes. The authorities have, however, taken steps to address potential SOE-related fiscal risks outside of the OBL framework. In this context, enactment of the draft law to reinforce the governance and oversight of SOEs will be an important step forward.

C. Was Growth and Employment Performance as Strong as Expected?

18. The authorities put forward a significant program of measures to help promote job-rich growth. To improve the business environment, emphasis was placed on streamlining administrative procedures for enterprises, improving investor protection by amending the law on limited-liability companies, strengthening public-private partnerships, and implementing measures to ensure the smooth application of the new procurement code. The authorities also unveiled a new national industrial acceleration program, which sought to foster the further development of new industries. Economic governance was to be improved by the entry into effect of a Competition Council, as well as reforms of the judicial system to boost independence and effectiveness and to improve transparency. The government revamped its active labor market policies and initiated a discussion with social partners on how to make the labor code more supportive of job creation while promoting adequate work conditions.

19. Growth however turned out to be lower than envisaged. Real GDP growth averaged 2.7 percent during 2014–16, about 2 percentage points lower than the projected 4.6 percent at the start of the arrangement (Figure 2). Although it is difficult to precisely account for the underperformance, an important contributory factor was over-optimism about the positive impact of past structural measures on growth, and the potential increase in output from the new industries. Difficulties in projecting volatile agricultural output also likely contributed. Although their effects are uncertain, and may operate with lags, the analysis below suggests that fiscal and external developments are unlikely to have contributed as significantly. While the external economic and trade environment remained subdued, particularly in the Euro Area, it was not weaker-than-expected as projected growth of about 1.6 percent turned out higher—at an average 1.9 percent during the period.⁵ Oil price developments were also favorable, with assumptions of US$103 per barrel during 2014–16, against actual oil prices averaging US$65 per barrel (Table 3). Fiscal policy was also unlikely to have played a significant role in growth underperformance, given the gradual consolidation path and relatively low fiscal multipliers.

20. Over-optimism in growth forecasts was not unique to Morocco. While oil price developments and regional circumstances have likely had different impacts across countries, over-optimism in growth forecasts has been prevalent in many years in other regional oil importers and a wider group of advanced, emerging, and developing countries (Figure 3). In Morocco’s case, there could have been more discussion about factors that would contribute to the increase in potential growth. The envisaged increase could have been better motivated by elaborating on the supply side drivers of growth, and the assumed link between investment, total factor productivity and the reform agenda. This would have allowed a clearer sense of how the impact of previously implemented structural reforms—and the pace of implementation of new reforms—would affect growth prospects and debt dynamics. More conservative growth projections would have also facilitated a more realistic discussion of the fiscal strategy, including whether further fiscal stimulus would have been appropriate. However, if the public sector debt sustainability analysis (DSA) in 2014 had used actual GDP growth during 2014–16 (2.7 percent) and 3.5 percent for the subsequent three years, then the projected public debt-to-GDP ratio by 2019 would have been about 7 percentage points higher than that projected at the time of the request for the PLL arrangement.

21. Unemployment declined between 2014 and 2016, but much remained to be done to ensure higher and more inclusive growth. The authorities’ objective of promoting more job-rich growth was partially met as unemployment decreased, but labor force participation remained low, especially among women. Broader indicators of poverty and living standards improved in recent years, reflecting sustained economic growth and policy action, including increased public spending on health, better access to sanitation, and greater reach of financial services. Nevertheless, poverty persisted, particularly in rural areas, and youth unemployment remained high. The 2016 Article IV Consultation⁶ emphasized that high youth unemployment, inadequate education outcomes, and gender gaps are the barriers to higher and more inclusive growth.

22. The business environment also improved but much remained to be done to increase competitiveness and business opportunities. While Morocco improved its relative position in the World Bank’s “Doing Business⁷” rankings, key reforms were however still needed, including making the Competition Council operational and fighting corruption through a concerted implementation of the recently adopted national strategy.

D. Did the PLL Arrangement Help Improve External Competitiveness?

23. The second PLL arrangement aimed at continuing structural reform efforts to improve competitiveness. Specifically, and as described above, the authorities highlighted that potential growth would be lifted by enhancing competitiveness, the business climate, and governance, including through improved export performance and FDI inflows. A move to a more flexible exchange rate was not envisaged to occur within the program timeframe, and IMF staff assessed that a 10 percent increase in the minimum wage, spread over two years, was unlikely to impact competitiveness.

24. Price competitiveness improved modestly during the arrangement. Gains in competitiveness were reflected in a depreciation of the ULC-based real effective exchange rate (REER) in 2015, suggesting that the minimum wage increase had not had a material impact (Figure 4). While a steady nominal effective appreciation countered gains in price competitiveness during the arrangement, by late-2015 the real exchange rate was assessed as broadly in line with fundamentals’⁸ erasing the moderate overvaluation at the start of the arrangement.

25. However, while the external balance strengthened as a share of GDP, this largely related to declining import prices, driven by lower oil prices. The economy saw a compositional shift in the goods export basket toward higher-value-added manufacturing exports such as automobiles (Figure 5).⁹ This was in line with the program strategy of broadening the range of industries. In addition, Morocco’s world export share increased gradually (Figure 6). However, while export volume growth remained robust, export prices did not pick up, and overall exports of goods and services remained broadly unchanged as a share of GDP. Hence, the 3.8 percentage point of GDP improvement in the current account over two years from the second quarter of 2014 was largely related to a declining value of imports, owing to the significant drop in oil prices, prompting a decline in the 12-month sum of energy imports during June 2014 to June 2016 that exceeded the decline in total imports (Figure 5 and Table 3).

Furthermore, while FDI inflows strengthened during 2014 and into 2015, supporting exports, by the end of the program, the four-quarter sum of inward FDI had declined about ¾ percentage point of GDP from its peak in 2015. That said, improvements in competitiveness may take time to materialize and would also likely arise as reform efforts continue.

A. Qualification

27. Staff assessed that Morocco met the PLL qualification standards at the time of the request and at each of the three reviews. A PLL arrangement can be approved¹¹ if the Fund assesses that the member (i) has sound economic fundamentals and institutional policy frameworks; (ii) is implementing—and has a track record of implementing—sound policies, and (iii) remains committed to maintaining such policies in the future. In addition, a member’s qualification for a PLL arrangement is assessed in the following five areas, requiring strong performance in most areas and no substantial underperformance in any of the areas: (i) the external position and market access; (ii) fiscal policy; (iii) monetary policy; (iv) financial sector soundness and supervision; and (v) data adequacy. In turn, the qualification under the five areas is assessed by taking into account a set of nine underlying criteria.¹² Consistent with the previous PLL arrangement, staff noted strong performance in the monetary policy area in light of low and stable inflation; the financial sector area, considering well-capitalized banks and further strengthening of supervision in line with Basel III standards; and the data adequacy area as a subscriber to the Special Data Dissemination Standard. In addition, it was assessed that Morocco did not substantially underperform in the external and fiscal areas. With the program generally on track for the duration of the arrangement, it was assessed that Morocco continued to qualify for a PLL arrangement also at each of the three reviews.

28. Continued qualification of Morocco was appropriate, not least considering the improvement in fundamentals during the first PLL arrangement. While Morocco had yet to perform strongly in two areas by the time of request for the second PLL arrangement, there had been a notable advancement. In the external sector area, the current account deficit had narrowed from 9.7 percent of GDP in 2012 to 7.6 percent of GDP in 2013 and was further narrowing. In addition, the overvaluation of the dirham had moderated.¹³ At the time of request for the August 2016 PLL arrangement, Morocco was assessed to perform strongly in the external position and market access area. In the fiscal policy area, the still-high fiscal deficit at 5.5 percent of GDP in 2013 had been reduced by about to 2 percentage points of GDP in one year and, as noted above, fiscal balances improved during the course of the arrangement. As such, qualification for a successor PLL arrangement as well as continued qualification at each of the three reviews was appropriate.

B. External Risks and Access

29. At the time of request for the second PLL arrangement, external risks remained elevated but had moderated relative to the first arrangement. The April 2014 World Economic Outlook noted that relative to six months earlier, the balance of risk for global growth had improved but that important downside risks remained and that new risks had emerged, particularly for emerging markets where downside risks had increased. In the case of Morocco, external risks related to (i) a protracted period of slower growth in trading partners, in particular Europe, which could reduce FDI inflow and weaken remittances, tourism, and exports; (ii) a surge in global financial market volatility, which could hamper access to international capital markets and reduce portfolio and FDI flows; and (iii) geopolitical risks in the Middle East and Ukraine/Russia, which could result in higher oil prices and thereby worsen the current account. Overall, however, and relative to two years earlier when the first PLL arrangement was approved, the balance of risks was assessed as somewhat more favorable.

30. On the back of attenuated external risks and improved fundamentals, the authorities requested a reduction in access. In addition to the assessment of some moderation in external risks, the authorities noted that fundamentals had strengthened: The budget deficit had been reduced by 1.2 percentage points of GDP between 2011 and 2013 and the current account deficit narrowed 2.2 percentage points of GDP in 2013. Furthermore, international reserves increased markedly toward the end of the first PLL arrangement on the back of bond issuances by both the sovereign and a state-owned enterprise. In turn, international reserves reached 97 percent of the Fund’s Assessing Reserves Adequacy (ARA) metric in June 2014 (without considering capital controls), close to the lower bound of the recommended level of between 100 and 150 percent of the metric. Thus, the authorities requested a 21 percent reduction in access to 550 percent of quota¹⁴ (about USD 5 billion) from 700 percent of quota (about USD 6.2 billion) in the 2012 PLL arrangement.

31. The level of access was in accordance with the four exceptional access criteria. The Fund may approve access in excess of normal limits, provided that the four substantive criteria, listed below, are met. This ex post evaluation agrees with staff’s assessment that all four criteria were fully met at the time of approval of the arrangement and at each of the three reviews.

• Criterion 1. The member is experiencing or has the potential to experience exceptional balance of payments pressures on the current account or the capital account, resulting in a need for Fund financing that cannot be met within the normal limits. Met. Morocco did not face an actual balance of payment need at the time of request for the PLL arrangement. However, the adverse access scenario illustrated how a potential financing gap at exceptional access levels could arise, prompted by a materialization of external downside risks. As external risks remained elevated during the arrangement, the level of access continued to be in accordance with this criterion.

• Criterion 2. There is high probability that the member’s public debt is sustainable in the medium term. Met. At the start of the arrangement, Morocco’s public debt at below 65 percent of GDP was projected to peak in 2015. Stress tests indicated that under the standard shocks, debt ratios would remain sustainable over the medium term. While a modest increase in general government debt was still envisaged in 2016 by the end of the program, the debt sustainability analysis showed a notable improvement on the back of declining deficits.

• Criterion 3. The member has prospects of gaining or regaining access to private capital markets within a timeframe and on a scale that would enable the member to meet its obligations falling due to the Fund. Met. Morocco had on several occasions during the first PLL arrangement accessed international capital markets. With the program generally on track during the second arrangement, it was appropriate to continue to assess that, if needed, Morocco could access international capital markets within a timeframe and on a scale to be able to meet its potential obligations to the Fund.

• Criterion 4. The policy program of the member provides a reasonably strong prospect of success, including not only the members’ adjustment plans but also its institutional and political capacity to deliver that adjustment. Met. With the qualification criterion of sound economic fundamentals and institutional policy frameworks fulfilled at the time of request for the arrangement and at each of the reviews, as well as a continued improvement in public sector deficits during the arrangement, exceptional access was in accordance with this criterion.

32. Phasing of access allowed for maximum access in the first year, increasing to the full amount of access in the second year. Access under PLL arrangements was capped at a maximum of 500 percent of quota during the first year, with the remainder becoming available at the beginning of the second year of the arrangement. Consistently, the access scenario pointed to a potential financing gap of 494 percent of quota in the first year, increasing to 543 percent of quota in the second year. As such, the quantitative financing needs scenario was well aligned with the phasing under the program. In addition, frontloading of access to the limit allowed under the PLL instrument provided the maximum backstop against external risks. While not clearly specified in the report, the quantitative access scenario reveals that the potential financing gaps in the two years were determined over a rolling 12-month window as permitted for estimating precautionary balance of payments needs. This resulted in two separate access scenarios in the two years of the arrangement that nonetheless originated from the same underlying shocks.

33. To support access decisions, an external economic stress index (ESI) became required in 2014. The ESI was implemented in response to the 2014 review of the Flexible Credit Line (FCL), the PLL, and the Rapid Financing Instrument (RFI)¹⁵ with the aim of assessing external risks and supporting access decisions. The index describes the evolution of external economic conditions through a weighted sum of variables that capture external risks, where weights correspond to the economic size of the corresponding balance of payments vulnerability.

34. Morocco’s ESI indicated that external conditions had improved, in line with the assessment at the time of program inception but that downside risks remained. The ESI for Morocco was implemented at the time of the first review under the arrangement. Variables in the ESI were (i) growth in the euro area to capture the risk of slower growth in trading partners; (ii) the emerging markets volatility index (VXEEM) to capture global financial volatility; and (iii) oil prices to capture the risk of an increase in these. The baseline ESI was computed using WEO projections and pointed to a gradual improvement in external economic conditions during 2012–13 (Figure 7). The downside scenario was computed based on a euro area growth slowdown scenario (as per the 2013 spillover report) as well as on an estimate of the potential impact on oil prices of a geopolitical crisis (as per the 2014 spillover report). Assumptions on the change in the VXEEM in the downside scenario were not specified in the staff report but included a one standard deviation increase above the average value.

35. However, the presentation of the evolution of risks during the arrangement was not complete. Three issues stand out, which limited transparency. First, the weights applied to the external variables were changed within the PLL arrangement without explanation.¹⁶ While the change in weights may not have had material importance in the case of Morocco, it nonetheless has the potential for complicating an assessment of relative risks over time. Second, while the ESI baseline (i.e. the external variables) was appropriately updated with the latest WEO projections, the downside scenario became increasingly outdated as shocks in the second and third reviews remained unchanged from the original ones. While this likely reflects a lack of updated results from the given spillover reports, alternatives could have been used. For example, the October 2014 WEO estimated that secular stagnation could result in a 0.5 percentage point decline in growth in advanced economies relative to the baseline. Third, the omission of a description of the shock to the emerging markets volatility index resulted in an incomplete presentation of assumptions in the downside scenario.

36. The PLL policy on phasing of access led to a counterintuitive outcome when applied to the 2014–2016 PLL arrangement with Morocco. The phasing was in accordance with Fund policy and was aligned with the quantitative access scenario.¹⁷ However, despite having a track-record of implementation under the higher access (700 percent of quota) 2012–2014 PLL arrangement—and with vulnerabilities being addressed during the first year of the 2014–2016 arrangement—application of the PLL policy meant that Morocco’s access increased again from 500 percent of quota in the first year, to 550 percent in year two. While recognizing the need to safeguard Fund resources—which points to the appropriateness of an initial access limit for the instrument—the PLL policy appears somewhat counterintuitive in the context of a country with back-to-back declining access arrangements that is addressing its vulnerabilities. While the irregular access path was not a significant issue for Morocco—with the increase being only 50 percent of quota—there could be broader policy implications for other countries, particularly as such a situation implies a greater drawdown of reserves if an exogenous shock hits in year one of the successor arrangement.

37. Further discussion of the assumed reserve drawdown would have been beneficial. The financing gap was defined as the remaining financing needs after drawing down reserves to a level corresponding to 90 percent of the Assessing Reserve Adequacy (ARA) metric. This allowed for a larger reserve buffer in the adverse scenario than what had been assumed in the first PLL arrangement, where reserves were allowed to fall to 85 percent of the ARA metric. In addition, accounting for capital controls would put reserve adequacy well into the recommended adequacy range. Allowing a drawdown to 85 percent of the ARA under the second PLL arrangement would have reduced the financing needs by USD 1.1 billion and USD 1.2 billion in the two years, respectively. Such a scenario would have corresponded to access of 410 percent of quota instead of the requested 550 percent of quota (Figure 8). A clear discussion of the change in assumption on the reserve drawdown from the first arrangement would therefore have been warranted and improved transparency in access considerations. That said, considering the pace of reserve drawdown would also be important in access discussions. Hence, the gradual reduction in access that was approved by the IMF’s Executive Board likely facilitated a smooth exit strategy with lower risk of adverse market reaction.

C. Exit Strategy

38. In line with PLL guidelines, the authorities clearly indicated their intention to exit from the PLL-supported program as external risks receded. The PLL guidance note,¹⁸ completed after the approval of Morocco’s 2014 PLL arrangement, stated the need for referring to exit expectations in the authorities’ written communication. Indeed, this was fulfilled with the authorities’ mention that “continued strengthening of the economy’s resilience, including by further reducing the fiscal and external deficits and strengthening the reserve position, is expected to position Morocco well for exiting the PLL, once the exogenous risks to which the economy is exposed have significantly declined.” Furthermore, the authorities’ request for a reduction in access was a clear signal of their intent to gradually exit from the PLL.

39. The reduction in access was not associated with adverse market reaction, pointing to a well-communicated gradual exit. The approval of the 2014 PLL arrangement with lower access was announced through a press release on July 28, 2014. EMBI spreads for Morocco narrowed on the day of announcement and was 12 basis points lower two days later (Figure 9). As such, the process of gradually exiting from the PLL at the time of the second arrangement was in line with Fund policy and was successful from a signaling perspective.

D. Focus of Conditionality

40. The parsimonious use of ex-post conditionality was appropriate. A PLL arrangement is subject to ex ante conditionality in the form of the qualification assessment. Furthermore, as stated in the PLL Decision, PLL arrangements with duration of one to two years shall have ex-post conditionality that includes indicative targets, as well as standard performance criteria.¹⁹ Under the Guidelines on Conditionality, arrangements may also include other performance criteria, prior actions, and structural benchmarks when critical for program success. In the case of Morocco, it would have been reasonable to discuss the use of additional conditionality in the context of passing the OBL in a timely manner. Furthermore, given the lower than expected growth performance, additional ex-post conditionality could have been considered on measures necessary to boost investment and raise productivity. However, at no point during the arrangement did performance suggest that the use of additional conditionality would be critical for the authorities to successfully implement their program. Furthermore, given the authorities’ strong ownership of the program—evidenced through the corrective actions taken during this and the first PLL arrangement—additional ex-post conditionality was not needed and could have been counterproductive.