RABAT (Reuters) - Standard and Poor's raised Morocco's foreign and local currency ratings one notch on Tuesday, saying that by reducing its debt the Moroccan government had given itself more flexibility in economic policy.

The agency said in a statement it had raised Morocco's long-term foreign currency sovereign credit rating to 'BBB-' from 'BB+', and its long-term local currency sovereign credit rating to 'BBB+' from 'BBB'.

Morocco's combined foreign and domestic debt stock was slashed as a proportion of gross domestic product to 48 percent last year from 68 percent in 1998, according to the government's figures.

"The upgrade reflects our view of the Moroccan government's improved economic policy flexibility as a result of its track record in reducing the country's fiscal and external debt burdens over the past decade," said Standard & Poor's credit analyst Veronique Paillat-Chayrigues.

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Morocco posted the highest growth rate in the Middle East and North Africa region in 2008 with 5.6 percent expansion. That slipped to 5.1 percent in 2009 as the country's non-farming gross domestic product slowed due to the global crisis.

This means the Moroccan treasury can sell its debt to a wider range of buyers and at a marginally better price. It also raises the profile among a certain class of investors generally, and raises the ceiling for private issuers.

Decent development, the fruits of economic liberalisation, takes patience but arrive.