(Bloomberg) -- The economic disruptions caused by the spread of the coronavirus are exposing the limits of monetary policy in Morocco, with inflation staying below zero even after the central bank’s biggest interest-rate cut in history.

An easing cycle that started in March has done little to get the $119 billion economy back on track just as other defenses are proving inadequate and virus cases surge. Reducing the benchmark from a record-low 1.5% this week would amount to a “meaningless announcement” in the current climate, said Abdelouahed El Jai, a former central bank director and economist at Cerab, a think tank in the capital, Rabat.

Limited room for further easing will likely prompt central banks from Nigeria to Thailand to hold rates this week. In Morocco, just over half of local investors polled by a unit of the kingdom’s largest lender expect the benchmark to stay unchanged after 75 basis points of cuts this year.

Instead, attention at Tuesday’s quarterly policy meeting of the Bank al-Maghrib, as Morocco’s central bank is known, may turn to possible guidance for local lenders to address grievances by a majority of the country’s 4 million small-sized enterprises over being excluded from a state-sponsored financial aid program to mitigate the pandemic’s effects.

A multi-billion dollar fund designed to help citizens and companies is near depletion and protests are becoming more frequent. Over half of the more than 36 million population has become dependent on state handouts for sustenance after a national lockdown from March to June.

Vulnerabilities highlighted by the pandemic extend to the government’s finances. In April, it tapped its entire liquidity line of about $3 billion with the International Monetary Fund to cope with the shock.

The Finance Ministry is now preparing a budget bill for 2021 amid anticipation of higher taxes for high earning Moroccans and corporations. Expectations of a decline in tax revenue and bigger outlays on social spending will likely produce much wider deficits this year and next.

Meanwhile, the spread of contagion risks derailing prospects for a turnaround in the tourism-dependent economy.

Annual inflation slipped below zero in May for the first time in over a year and has remained negative ever since. A new rate cut would be no guarantee that demand will perk up just as two previous reductions failed to pull consumer prices higher, said Rachid Aourraz, an economist at the Moroccan Institute For Policy Institute.

“The disconnect between monetary policy focused on 2% inflation and the real economy has always been here,” said Aourraz. “There is little the central bank can do for demand. Even if the governor goes out to hand cash to ordinary Moroccans, a majority will be stashing it or spending it on bare necessities.”

©2020 Bloomberg L.P.