## MOROCCO — REPORT ON THE MONETARY AND FINANCIAL STATISTICS MISSION (JULY 17–28, 2017) ## Source details **Canonical URL:** [MOROCCO — REPORT ON THE MONETARY AND FINANCIAL STATISTICS MISSION (JULY 17–28, 2017)](https://www.imf.org/-/media/files/publications/cr/2019/1marea2019002.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2019/1marea2019002.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2019/1marea2019002.pdf.json) --- ### Summary of mission outcomes and priority recommendations - STA has worked with Bank Al-Maghrib (BAM) over the last 10 years to establish standardized report forms (SRFs)-based monetary and financial statistics (MFS), reflecting the IMF’s Monetary and Financial Statistics Manual and Compilation Guide. - Morocco became an SRF reporter in June 2010 with SRF 1SR (central bank) and SRF 2SR (ODCs) and has continuously transmitted these SRFs to STA. - The current mission’s main objective was to finalize SRFs for other financial corporations (OFCs); OFCs represent some 40 percent of the total balance sheet of financial corporations (excluding the central bank). - The mission validated Morocco’s provisional SRF 4SR for OFCs, developed flexible bridge tables, reviewed and corrected sectoring and classification issues, and concluded the revised data are adequate for IFS publication and surveillance use. - The mission prepared a detailed action plan with priority recommendations (Table 1). Priority recommendations (target date and responsible institutions): - December 2018 — Develop a bank reporting form providing information on securities valued at market prices or fair value. Responsible: Economic Research Department – BAM; Banking Supervision Department – BAM. - December 2018 — Develop reporting forms for finance companies with breakdown of items by institutional sectors. Responsible: Economic Research Department – BAM; Banking Supervision Department – BAM. - December 2018 — Develop a reporting form for offshore banks providing information on their transactions with other financial institutions. Responsible: Economic Research Department – BAM; Banking Supervision Department – BAM. ### Importance of other financial corporations (OFCs) in Morocco - OFCs’ assets to total financial system assets (excluding BAM) rose from 36 percent in December 2009 to 40 percent in December 2016. - Non-money market investment funds (NMMFs) and insurance corporations represent 60 percent of the OFC sector. - Omitting OFCs from monetary statistics generates a large statistical bias, particularly for the net claims on the central government aggregate: more than half of the statistical information in this aggregate is lost when coverage is limited to banks and money market funds only. A significant share of OFCs’ claims on the central government is government bonds held by NMMFs. - Financial inclusion indicator: number of households per 1,000 adults with a deposit account in a commercial bank was around 800 in 2015, up from 291 in 2004 (IMF Financial Access Survey). ### NMMFs, insurance, pension funds, and other OFC subsectors — key statistics and observations - Non-money market investment funds (NMMFs): - NMMF sector represented around 36 percent of the total balance sheets of OFCs and 31 percent of GDP in 2016. - The total balance sheet of NMMFs doubled between December 2011 and June 2017. - NMMF subsectors include equity-focused (at least 60 percent in shares), bond-focused (at least 90 percent in bonds), contractual NMMFs, and diversified NMMFs. - Bond-investment NMMFs represent over 80 percent of the total balance sheet of the NMMF sector. - Insurance corporations (ICs): - The IC sector comprises 18 insurance and reinsurance corporations. - ICs’ technical reserves consist mainly of net equity of households in life insurance (47 percent). - ICs’ holding of banks’ shares amounted to MAD27.7 billion in 2017, up from MAD17 billion in 2009; these shares represent approximately 14 percent of total assets of the IC sector. - Mission recommended BAM contact the Insurance and Social Security Supervisory Authority to review the interpolation method used to produce quarterly estimates from source data. - Pension funds: - Two pension funds: Caisse interprofessionnelle marocaine des retraites (hybrid defined benefit and defined contribution) and Caisse nationale de retraite et d’assurance (CNRA, defined benefit). - Definitions of plan types follow actuarial/formula-based rules for defined benefit and contribution-based outcomes for defined contribution plans. - Other financial intermediaries: - Thirty-four finance companies and several non-deposit-taking microcredit associations are part of the OFC sector. - Total combined assets of finance companies represented approximately 11 percent of GDP in 2016. - Loans granted by finance companies represented 11 percent of the loans granted by all financial corporations. - Other OFC entities include offshore banks and the Caisse de dépôts et de gestion. - The above developments underscore the benefits of collecting reliable OFC statistics for analysis and decision-making. ### Detailed technical assessment and recommendations (action plan highlights) - Outcome 1: Institutional coverage aligned with latest Manual/Compilation Guide - High priority: Explore obtaining source data for Fonds de Placement Commun en Titrisation (FPCT) from the Moroccan Capital Markets Authority (MCMA). Target completion: June 2018. - If MCMA shares data, begin regular collection for SRF 4SR for the FPCTs. Target completion: December 2018. - Outcome 2: Recording basis consistent with latest Manual/Compilation Guide - High priority: Develop a reporting form for banks providing information on securities valued at market prices or fair value. Target completion: June 2018. - Begin regular collection of bank data on securities valued at market prices. Target completion: June 2019. - Outcome 3: Primary data adequate for SRF production - Develop reporting form providing a breakdown by institutional sector of finance companies’ operations with other financial institutions and of their financial leasing operations with nonfinancial corporations and households. Target completion: June 2018. - Seek feedback from finance companies on draft reporting template. Target completion: June 2018. - Incorporate feedback and finalize the reporting template. Target completion: December 2018. - Begin regular collection of finance companies’ source data using the reporting template and update SRF 4SR accordingly. Target completion: June 2019. - Begin regular collection of source data providing a breakdown by counterparty of offshore banks’ operations with other financial institutions and update SRF 4SR accordingly. Target completion: December 2018. - Initiate discussions with offshore banks to refine sectoring and delineation between resident and nonresident counterparties. Target completion: June 2018. - Outcome 4: Increased data frequency - Primary data for OFCs to be produced at least quarterly. - Explain interpolation techniques used to convert insurance corporations’ source data to quarterly data in the metadata. Target completion: June 2018. ### Implementation progress - The mission reviewed recommendations from the March–April 2011 MFS mission and found BAM has made significant progress. ### Staffing and Implementation of 2011 Recommendations - BAM reduced human resources constraints that had slowed SSM efforts to ensure full migration of Morocco’s monetary statistics to the SRFs. - The 2011 mission recommended recruitment of one additional economist-statistician in the SSM given expanded institutional coverage to include OFCs; this recommendation was implemented. - The SSM received three officials with the recommended statistical background, thus doubling its staff and bringing greater flexibility in the division. - All actions identified as benchmarks during the 2011 mission were fully implemented, including new bank report forms deployed in June 2012. ### In-depth Analysis of the OFC Data - All criteria used to assess the quality of monetary statistics were applied in the review of the SRF 4SR produced by the SSM, including institutional sectoring of accounts, classification of financial assets, valuation of securities, accrual basis accounting, and timeliness of collecting source data. - The mission considers the SRFs 4SR produced by BAM to be broadly adequate for inclusion in the IMD and for use in surveillance and program monitoring. - Areas for improvement identified in the action plan: - (i) improvement of institutional coverage, especially the inclusion FPCTs in the coverage of MFS; - (ii) collection of data on securities held by banks and valued at market prices or fair value; - (iii) refinement of the sectoring of accounts; and - (iv) improvement of the frequency of the source data for insurance corporations. - FPCTs: - The mission encouraged BAM to continue discussions with the Moroccan Capital Markets Authority to begin collection of source data of FPCT and incorporate this entity in SRF 4SR. - According to the SSM, the FPCT was created by the National Electricity and Water Board (ONEE). Funds raised by the FPCT through securitization of ONEE’s future revenues are systematically made available to ONEE to cover its cash flow needs. - The mission recommended that these advances be recorded as claims of the FPCT on ONEE under the heading “Trade Credits/Advances - Nonfinancial Public Corporations.” - Securities valuation: - The mission supported BAM’s proposal to develop a reporting form for collection of bank source data on securities valuation. - Depending on results of discussions between BAM and the banking profession on existence of additional data that could facilitate revaluation at market prices, BAM staff could begin to collect this information on a regular basis in 2019. - Sectoring of finance companies and offshore banks: - Current report forms for finance companies and offshore banks do not provide breakdowns of items by counterparties; SSM uses various assumptions to estimate allocations using banks and money market funds’ data. - Loans to households are estimated by considering total loans of finance companies that specialize in consumer loans; loans to private nonfinancial corporations are considered to be total loans of leasing and factoring companies. - Although assumptions seem plausible and do not significantly affect data quality, the mission recommended future direct collection of counterparty information from finance companies and offshore banks to minimize error transfer from banks and money market funds’ financial statements to SRF 4SR. - For financial leasing operations, while a large portion involves private nonfinancial corporations, some operations could also involve households. - For offshore banks, the mission recommended initiating discussions with these institutions to ensure accuracy of sectoring of accounts by residence. - Insurance corporations’ frequency conversion: - Semi-annual source data for insurance corporations are converted to a quarterly frequency by the Insurance and Social Security Supervisory Authority (ACAPS), who transmits the data to BAM, but the SSM is not aware of the specific interpolation techniques used. - The mission recommended that BAM obtain a methodological note explaining the method used by ACAPS for the conversion of the data to a quarterly basis. ### Islamic Banks - The mission held discussions with the Banking Supervision Department on classification in monetary statistics of financial products offered by Islamic banks; Morocco recently granted licenses to Islamic banks expected to become operational in the coming months. - The consolidated legislative framework proposed for conventional banks and Islamic banks facilitates inclusion of Islamic banks in monetary statistics. - The mission was requested to assist with classification of Islamic banks' financial products in the SRFs, taking into account specific characteristics. - Sharia precepts for Islamic bank products noted: - interest-bearing loans are prohibited; - excessive risk-taking is prohibited (Al Gharar); - financial assets must be backed by real assets; - the lending institutions must participate in the profits and losses associated with the projects; and - goods may only be sold by their owners. - The mission and BAM staff agreed on general principles for classification of products (Ijara, Murabaha, Musharakah, Mudaraba, Salam). Discussions will continue as these banks become operational and the collection and analysis of their source data by the SSM begins. ### Financial Soundness Indicators (FSIs) - The mission held a working session with the Financial Stability Department and the Banking Supervision Department on possibility for BAM to begin regular transmission of Morocco’s FSIs to STA. - Purpose: review sources and methods used in compiling the FSI and their use in macroprudential analyses; identify necessary steps for BAM to begin regular reporting of Morocco’s FSIs to STA, including scheduling of a technical assistance mission on the FSIs. - The principle of an STA technical assistant mission to Morocco in 2018 was agreed during these discussions. - STA’s Financial Institutions Division will contact the Financial Stability Directorate teams in 2018 to schedule the mission. ### Interest Rates - Discussions aimed at identifying BAM’s main monetary policy rate. - The SSM will provide STA with data on the policy rate. - STA will create a code for the new series to allow the SSM to transmit these data using the SRF 6SR reporting form. ### Appendix I. List of Officials Met During the Mission (selected entries) - Mr. Mohamed Taamouti — Director, Economic Research Directorate - Mrs. Dounia Tahiri — Statistics Department - Mrs. Asmaa Hajar Essaid — Monetary Statistics Unit - Mrs. Ouissaal Mourad — Monetary Statistics Unit - Mr. Mohamed El khaoua — Monetary Statistics Unit - Mrs. Nada Mahrach — Monetary Statistics Unit - Mr. Halim Jadi — Macroprudential Surveillance Department (DSM) - Mr. Abderrahim Nassiri — Banking Supervision Directorate - Mrs. Laila Drissi Bourhanbour — Macrofinancial and Sectoral Risk Unit - Mrs. Hajar Bezza — Macroprudential Modelling and Macro Stress Test Unit (DSM) - Mr. Anas Nassim Belkhadir — Islamic Finance Regulation Department *Source: 1marea2019002 - Section 2* ### Section 1 ### MOROCCO — REPORT ON THE MONETARY AND FINANCIAL STATISTICS MISSION (JULY 17–28, 2017) ### Summary of mission outcomes and priority recommendations - STA has worked with Bank Al-Maghrib (BAM) over the last 10 years to establish standardized report forms (SRFs)-based monetary and financial statistics (MFS), reflecting the IMF’s Monetary and Financial Statistics Manual and Compilation Guide. - Morocco became an SRF reporter in June 2010 with SRF 1SR (central bank) and SRF 2SR (ODCs) and has continuously transmitted these SRFs to STA. - The current mission’s main objective was to finalize SRFs for other financial corporations (OFCs); OFCs represent some 40 percent of the total balance sheet of financial corporations (excluding the central bank). - The mission validated Morocco’s provisional SRF 4SR for OFCs, developed flexible bridge tables, reviewed and corrected sectoring and classification issues, and concluded the revised data are adequate for IFS publication and surveillance use. - The mission prepared a detailed action plan with priority recommendations (Table 1). Priority recommendations (target date and responsible institutions): - December 2018 — Develop a bank reporting form providing information on securities valued at market prices or fair value. Responsible: Economic Research Department – BAM; Banking Supervision Department – BAM. - December 2018 — Develop reporting forms for finance companies with breakdown of items by institutional sectors. Responsible: Economic Research Department – BAM; Banking Supervision Department – BAM. - December 2018 — Develop a reporting form for offshore banks providing information on their transactions with other financial institutions. Responsible: Economic Research Department – BAM; Banking Supervision Department – BAM. ### Importance of other financial corporations (OFCs) in Morocco - OFCs’ assets to total financial system assets (excluding BAM) rose from 36 percent in December 2009 to 40 percent in December 2016. - Non-money market investment funds (NMMFs) and insurance corporations represent 60 percent of the OFC sector. - Omitting OFCs from monetary statistics generates a large statistical bias, particularly for the net claims on the central government aggregate: more than half of the statistical information in this aggregate is lost when coverage is limited to banks and money market funds only. A significant share of OFCs’ claims on the central government is government bonds held by NMMFs. - Financial inclusion indicator: number of households per 1,000 adults with a deposit account in a commercial bank was around 800 in 2015, up from 291 in 2004 (IMF Financial Access Survey). ### NMMFs, insurance, pension funds, and other OFC subsectors — key statistics and observations - Non-money market investment funds (NMMFs): - NMMF sector represented around 36 percent of the total balance sheets of OFCs and 31 percent of GDP in 2016. - The total balance sheet of NMMFs doubled between December 2011 and June 2017. - NMMF subsectors include equity-focused (at least 60 percent in shares), bond-focused (at least 90 percent in bonds), contractual NMMFs, and diversified NMMFs. - Bond-investment NMMFs represent over 80 percent of the total balance sheet of the NMMF sector. - Insurance corporations (ICs): - The IC sector comprises 18 insurance and reinsurance corporations. - ICs’ technical reserves consist mainly of net equity of households in life insurance (47 percent). - ICs’ holding of banks’ shares amounted to MAD27.7 billion in 2017, up from MAD17 billion in 2009; these shares represent approximately 14 percent of total assets of the IC sector. - Mission recommended BAM contact the Insurance and Social Security Supervisory Authority to review the interpolation method used to produce quarterly estimates from source data. - Pension funds: - Two pension funds: Caisse interprofessionnelle marocaine des retraites (hybrid defined benefit and defined contribution) and Caisse nationale de retraite et d’assurance (CNRA, defined benefit). - Definitions of plan types follow actuarial/formula-based rules for defined benefit and contribution-based outcomes for defined contribution plans. - Other financial intermediaries: - Thirty-four finance companies and several non-deposit-taking microcredit associations are part of the OFC sector. - Total combined assets of finance companies represented approximately 11 percent of GDP in 2016. - Loans granted by finance companies represented 11 percent of the loans granted by all financial corporations. - Other OFC entities include offshore banks and the Caisse de dépôts et de gestion. - The above developments underscore the benefits of collecting reliable OFC statistics for analysis and decision-making. ### Detailed technical assessment and recommendations (action plan highlights) - Outcome 1: Institutional coverage aligned with latest Manual/Compilation Guide - High priority: Explore obtaining source data for Fonds de Placement Commun en Titrisation (FPCT) from the Moroccan Capital Markets Authority (MCMA). Target completion: June 2018. - If MCMA shares data, begin regular collection for SRF 4SR for the FPCTs. Target completion: December 2018. - Outcome 2: Recording basis consistent with latest Manual/Compilation Guide - High priority: Develop a reporting form for banks providing information on securities valued at market prices or fair value. Target completion: June 2018. - Begin regular collection of bank data on securities valued at market prices. Target completion: June 2019. - Outcome 3: Primary data adequate for SRF production - Develop reporting form providing a breakdown by institutional sector of finance companies’ operations with other financial institutions and of their financial leasing operations with nonfinancial corporations and households. Target completion: June 2018. - Seek feedback from finance companies on draft reporting template. Target completion: June 2018. - Incorporate feedback and finalize the reporting template. Target completion: December 2018. - Begin regular collection of finance companies’ source data using the reporting template and update SRF 4SR accordingly. Target completion: June 2019. - Begin regular collection of source data providing a breakdown by counterparty of offshore banks’ operations with other financial institutions and update SRF 4SR accordingly. Target completion: December 2018. - Initiate discussions with offshore banks to refine sectoring and delineation between resident and nonresident counterparties. Target completion: June 2018. - Outcome 4: Increased data frequency - Primary data for OFCs to be produced at least quarterly. - Explain interpolation techniques used to convert insurance corporations’ source data to quarterly data in the metadata. Target completion: June 2018. ### Implementation progress - The mission reviewed recommendations from the March–April 2011 MFS mission and found BAM has made significant progress. *International Monetary Fund — Technical Assistance Report: Report on the Monetary and Financial Statistics Mission (July 17–28, 2017).* ### Section 2 ### Section 2 ### Staffing and Implementation of 2011 Recommendations - BAM reduced human resources constraints that had slowed SSM efforts to ensure full migration of Morocco’s monetary statistics to the SRFs. - The 2011 mission recommended recruitment of one additional economist-statistician in the SSM given expanded institutional coverage to include OFCs; this recommendation was implemented. - The SSM received three officials with the recommended statistical background, thus doubling its staff and bringing greater flexibility in the division. - All actions identified as benchmarks during the 2011 mission were fully implemented, including new bank report forms deployed in June 2012. ### In-depth Analysis of the OFC Data - All criteria used to assess the quality of monetary statistics were applied in the review of the SRF 4SR produced by the SSM, including institutional sectoring of accounts, classification of financial assets, valuation of securities, accrual basis accounting, and timeliness of collecting source data. - The mission considers the SRFs 4SR produced by BAM to be broadly adequate for inclusion in the IMD and for use in surveillance and program monitoring. - Areas for improvement identified in the action plan: - (i) improvement of institutional coverage, especially the inclusion FPCTs in the coverage of MFS; - (ii) collection of data on securities held by banks and valued at market prices or fair value; - (iii) refinement of the sectoring of accounts; and - (iv) improvement of the frequency of the source data for insurance corporations. - FPCTs: - The mission encouraged BAM to continue discussions with the Moroccan Capital Markets Authority to begin collection of source data of FPCT and incorporate this entity in SRF 4SR. - According to the SSM, the FPCT was created by the National Electricity and Water Board (ONEE). Funds raised by the FPCT through securitization of ONEE’s future revenues are systematically made available to ONEE to cover its cash flow needs. - The mission recommended that these advances be recorded as claims of the FPCT on ONEE under the heading “Trade Credits/Advances - Nonfinancial Public Corporations.” - Securities valuation: - The mission supported BAM’s proposal to develop a reporting form for collection of bank source data on securities valuation. - Depending on results of discussions between BAM and the banking profession on existence of additional data that could facilitate revaluation at market prices, BAM staff could begin to collect this information on a regular basis in 2019. - Sectoring of finance companies and offshore banks: - Current report forms for finance companies and offshore banks do not provide breakdowns of items by counterparties; SSM uses various assumptions to estimate allocations using banks and money market funds’ data. - Loans to households are estimated by considering total loans of finance companies that specialize in consumer loans; loans to private nonfinancial corporations are considered to be total loans of leasing and factoring companies. - Although assumptions seem plausible and do not significantly affect data quality, the mission recommended future direct collection of counterparty information from finance companies and offshore banks to minimize error transfer from banks and money market funds’ financial statements to SRF 4SR. - For financial leasing operations, while a large portion involves private nonfinancial corporations, some operations could also involve households. - For offshore banks, the mission recommended initiating discussions with these institutions to ensure accuracy of sectoring of accounts by residence. - Insurance corporations’ frequency conversion: - Semi-annual source data for insurance corporations are converted to a quarterly frequency by the Insurance and Social Security Supervisory Authority (ACAPS), who transmits the data to BAM, but the SSM is not aware of the specific interpolation techniques used. - The mission recommended that BAM obtain a methodological note explaining the method used by ACAPS for the conversion of the data to a quarterly basis. ### Islamic Banks - The mission held discussions with the Banking Supervision Department on classification in monetary statistics of financial products offered by Islamic banks; Morocco recently granted licenses to Islamic banks expected to become operational in the coming months. - The consolidated legislative framework proposed for conventional banks and Islamic banks facilitates inclusion of Islamic banks in monetary statistics. - The mission was requested to assist with classification of Islamic banks' financial products in the SRFs, taking into account specific characteristics. - Sharia precepts for Islamic bank products noted: - interest-bearing loans are prohibited; - excessive risk-taking is prohibited (Al Gharar); - financial assets must be backed by real assets; - the lending institutions must participate in the profits and losses associated with the projects; and - goods may only be sold by their owners. - The mission and BAM staff agreed on general principles for classification of products (Ijara, Murabaha, Musharakah, Mudaraba, Salam). Discussions will continue as these banks become operational and the collection and analysis of their source data by the SSM begins. ### Financial Soundness Indicators (FSIs) - The mission held a working session with the Financial Stability Department and the Banking Supervision Department on possibility for BAM to begin regular transmission of Morocco’s FSIs to STA. - Purpose: review sources and methods used in compiling the FSI and their use in macroprudential analyses; identify necessary steps for BAM to begin regular reporting of Morocco’s FSIs to STA, including scheduling of a technical assistance mission on the FSIs. - The principle of an STA technical assistant mission to Morocco in 2018 was agreed during these discussions. - STA’s Financial Institutions Division will contact the Financial Stability Directorate teams in 2018 to schedule the mission. ### Interest Rates - Discussions aimed at identifying BAM’s main monetary policy rate. - The SSM will provide STA with data on the policy rate. - STA will create a code for the new series to allow the SSM to transmit these data using the SRF 6SR reporting form. ### Appendix I. List of Officials Met During the Mission (selected entries) - Mr. Mohamed Taamouti — Director, Economic Research Directorate - Mrs. Dounia Tahiri — Statistics Department - Mrs. Asmaa Hajar Essaid — Monetary Statistics Unit - Mrs. Ouissaal Mourad — Monetary Statistics Unit - Mr. Mohamed El khaoua — Monetary Statistics Unit - Mrs. Nada Mahrach — Monetary Statistics Unit - Mr. Halim Jadi — Macroprudential Surveillance Department (DSM) - Mr. Abderrahim Nassiri — Banking Supervision Directorate - Mrs. Laila Drissi Bourhanbour — Macrofinancial and Sectoral Risk Unit - Mrs. Hajar Bezza — Macroprudential Modelling and Macro Stress Test Unit (DSM) - Mr. Anas Nassim Belkhadir — Islamic Finance Regulation Department *Source: 1marea2019002 - Section 2* --- _Source: https://www.imf.org/-/media/files/publications/cr/2019/1marea2019002.pdf_