## _cr1058 - 2009. The mission met with Minister

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---

### Overview and crisis impact
- Direct impact of the global crisis on Morocco limited; main transmission through real channels (exports, tourism receipts, remittances, and FDI declined mainly due to the slowdown in Europe).
- Macroeconomic starting position strong after a decade of reforms; financial system sound with little exposure to international markets.
- Authorities’ response: moderate fiscal and monetary loosening and vigilant financial sector supervision to support confidence and domestic demand.
- Exceptional cereal harvest in 2009 contributed to strong real GDP growth.
- Short-term challenge (2010): support economic activity amid weak external environment; risks to growth are weighted to the downside.
- Medium-term priorities: boost growth and living standards, maintain macroeconomic stability, and move gradually to a more flexible monetary and exchange rate regime paired with structural reforms.
- Next Article IV consultation: standard 12‑month cycle; last Article IV concluded July 23, 2008.

### I. Weathering the Global Crisis — key findings and indicators
- Financial exposure and resilience:
  - FX-loans represent only 2.4 percent of total loans.
  - Financial system sound and well capitalized with limited linkages to international financial markets; restrictions on capital outflows.
  - Bank funding largely deposit-based and dominated by domestic credit.
  - Foreign participation on the equity market: just over one-quarter of the total; over 70 percent of individual investors are Moroccan residents abroad.
  - Limited direct exposure of Moroccan banks to Dubai-related events; direct impact from Dubai World expected to be small.
- Crisis impact through real channels (first half of 2009 vs. same period in 2008):
  - Exports: down by 34 percent.
  - Tourism receipts: fell by 14 percent.
  - Remittances: fell by 12 percent.
  - FDI: down by 34 percent.
- Policy response and outcomes:
  - Fiscal balance shifted from a small surplus in 2008 to a deficit of about 2½ percent of GDP in 2009 due to tax rate reductions, civil servant wage increases, higher public investment, and targeted sector support.
  - Revenue fell sharply reflecting the downturn, tax policy changes, and absence of one-off factors present in 2008; offset in part by lower subsidies due to lower world commodity prices.
  - Bank Al-Maghrib (BAM) lowered its key policy rate by 25 basis points.
  - Reserve requirements reduced from 15 to 8 percent in 2009 to boost liquidity.
  - Real nonagricultural GDP growth of about 2½ percent expected for 2009; overall GDP growth in 2009 projected at around 5 percent owing to exceptional cereal harvest.

### II. Short-term outlook, risks, and 2010 policy stance
- External environment and outlook:
  - Growth in the euro zone projected to be slightly positive but low in 2010, contributing to a gradual recovery of exports and remittances.
  - Low share of exports, notably manufactures, will likely mute the recovery in 2010 relative to countries with export-driven rebounds.
- Risks to growth:
  - Downside risks: further deterioration in terms of trade from an increase in oil prices or decline in phosphate prices; slower rebound in tourism and remittances due to prolonged Euro area weakness.
  - Upside risk: a more rapid recovery in Europe.
- Fiscal stance and policy measures for 2010:
  - 2010 budget envisages a budget deficit of 4.4 percent of GDP to provide significant stimulus.
  - Stimulus measures include an additional increase of about ½ a percent of GDP in capital expenditure.
  - Strong investment programs in the public enterprise sector, including in the phosphate sector, will also boost demand.
  - Second phase of income tax reform: increase in the income threshold of all tax brackets and reduced tax rates; tax revenue also expected to decrease due to slowed private sector activity in 2009 and 2010.
- Subsidy reform:
  - Early steps: reduced volume of subsidized wheat and launched a pilot program to distribute targeted cash assistance.
  - Authorities intend to develop a global reform program to gradually eliminate universal subsidies in parallel with targeted support mechanisms.
- Financial sector vigilance:
  - Credit growth slowed from an average of 23 percent per year over 2006–08 to about 12 percent growth in 2009.
  - Nonperforming loans (NPLs) fell sharply over the last five years in ratio terms; NPLs in nominal terms remained broadly level.
  - A moderate upturn in NPLs is expected given the slowdown; authorities’ vigilance and attention to capital requirements warranted.
  - Continued implementation of Basle II is welcome.

### III. Financial sector details, real estate, and macroprudential measures
- Financial sector credit and NPLs:
  - Credit growth: averaged 23 percent per year over 2006–08; slowed to about 12 percent in 2009.
  - Authorities established a credit bureau managed by a private entity now operational and expanding activities.
  - Development of a real estate price index and periodic surveys underway to better understand asset price developments.
- Real estate sector:
  - Real estate credit represents 34 percent of total loans.
  - Real estate credit growth: 20 percent (y-o-y) through October (growth has slowed in recent months).
  - NPLs in the sector remain low and provisioning is high; limited supply of new housing units due to zoning restrictions will continue to sustain prices in the short term.
- Basel II and capital adequacy:
  - Standardized approach introduced in 2007; authorities intend to move to the advanced approach beginning in 2011.
  - CAR requirements raised at end-2008 from 8 to 10 percent of risk-weighted assets.
  - Average CAR for the whole banking system: 11.7 percent in June 2009.
  - Authorities announced intention to raise this ratio to 12 percent for certain banking institutions, based on their risk profile, while taking into account the economic situation to avoid pro-cyclical effects.
  - Staff encouraged openness to further adjustments to the CAR given brisk credit growth.

### IV. Fiscal framework, debt risks, and public enterprise sector
- Fiscal consolidation and medium-term targets:
  - Authorities broadly agreed with staff that the public finance framework should aim to bring the deficit below 3 percent of GDP to stabilize the debt-to-GDP ratio.
  - Debt sustainability analysis: a growth shock or a combined real depreciation and contingent liabilities shocks could raise public debt by 7-9 percentage points by 2014.
  - Staff recommendation: starting in 2011, reduce the fiscal deficit gradually, returning to a deficit of 3 percent of GDP by 2012–13.
  - Cyclically-adjusted fiscal balance mirrors closely the actual balance, implying limited role for automatic stabilizers.
- Public enterprise sector (Box 2):
  - As of 2008 the sector comprised 716 public enterprises: 460 corporations with between 5 and 100 percent public ownership and 256 public service providers.
  - In 2008 they generated about 12 percent of total added value.
  - Their investment expenditure was 9.6 percent of GDP (almost twice the central government capital expenditure of 5.5 percent of GDP).
  - They employed 124.6 thousand persons (about 14 percent of total public sector employment), of which 39.5 thousand (about 4 percent of total public sector employment) are employed by public corporations.
  - In 2009 planned investment by public enterprises increased by over 16 percent and a further increase of 30 percent is foreseen in the 2010 budget allocations.
  - Public enterprise sector executed 91 percent of the investment budget in 2008; contribution to the 2010 stimulus depends on maintaining high execution rates.

### V. Structural reforms, competitiveness, and social policy priorities
- Competitiveness and trade:
  - Competitiveness indicators suggest some erosion relative to competitor countries.
  - Current account: surplus 2001–06; in deficit since 2007.
  - Trade balance: record high deficit of 22 percent of GDP in 2008.
  - Imports roughly twice exports in recent years; import growth driven by price effects (energy and raw materials) and import volumes through 2008.
  - As measured by the WTO, average tariff fell to 20 percent in 2008 from 33 percent in 2002; average effective tariff is now 5 percent.
  - Staff encouraged further lowering top rates, consolidating rates, reducing high MFN import tax rates, and ensuring coherence of regional accords to reduce trade distortions.
- Structural and public finance reforms:
  - Priorities: improve business environment, strengthen physical infrastructure, boost competitiveness of key sectors.
  - Public finance reforms to improve efficiency and composition of spending to strengthen returns on public investment in human and physical capital.
  - Tax reform encouraged: simplify VAT and customs tariffs, reduce the number of rates and exemptions, extend reimbursements for VAT credits; overhaul of VAT rates could reduce the normal rate with a neutral impact on revenue.
- Social sector and productivity:
  - Poverty rate fell from 15 percent in 2001 to 9 percent in 2007.
  - Unemployment has fallen overall, but youth unemployment remains problematic; literacy and other social indicators are low relative to peers.
  - 2005: authorities launched the « Initiative nationale du développement humain », a program of more than $1 billion over 5 years.
  - Education goals: universalize basic education by 2015; increase graduation and employment rates and expand vocational training.
  - Health goals: reduce infant and maternal mortality rates by developing a universally acceptable care package.
  - Authorities working with development partners, including the World Bank.

### VI. Exchange rate regime, inflation targeting assessment, and data/technical assistance
- Exchange rate arrangement:
  - Morocco maintains a conventional peg arrangement.
  - The Moroccan dirham is pegged to a basket comprising the euro and the U.S. dollar, with respective weights of 80 and 20 percent.
  - BAM intervenes to maintain the exchange rate within its target range, defined around a fixed central rate.
  - As of December 10, 2009, the SDR/dirham exchange rate was SDR 1=MAD 12.29.
- Preconditions for inflation targeting (reported assessments):
  - Central Bank Infrastructure (fulfilled): Data availability (√); Systematic forecast process (√); Models capable of conditional forecasts (√).
  - Institutional Independence (fulfilled): Central bank independence (√); Absence of fiscal obligation (√); Operational independence (√); Inflation-focused mandate (√); Favorable fiscal balance (√); Low public debt (√).
  - Financial Development (partially fulfilled): Solid capital adequacy ratio (√); Strong stock market capitalization (√); Depth of private bond market (—); Low currency mismatch faced by domestically owned banks (√); Even distribution of bond maturities (—).
  - Economic Structure (largely fulfilled): Low exchange rate pass-through (—); Low sensitivity to commodity prices (—); Low dollarization (√); Trade openness (√).
- Data availability and technical assistance:
  - Morocco is a SDDS subscriber since December 2005.
  - Data provision assessed as adequate for surveillance across national accounts, government finance, balance of payments, and monetary/financial statistics.
  - Recent and planned TA missions listed across MCM, STA, FAD and other departments (2007–2010).

### VII. Annex I — Selected IMF financial and membership data (exact figures)
- Membership status:
  - Joined: April 25, 1958
  - Article VIII
- General Resources Account:
  - Quota: 588.20 (SDR Million) — 100.00 % Quota
  - Fund holdings of currency: 517.76 (SDR Million) — 88.02 % Quota
  - Reserve Position: 70.45 (SDR Million) — 11.98 % Quota
- SDR Department:
  - Net cumulative allocation: 561.42 (SDR Million) — 100.00 % Allocation
  - Holdings: 488.06 (SDR Million) — 86.93 % Allocation
- Outstanding Purchases and Loans: None
- Latest financial arrangements (selected):
  - Stand-By: Jul 20, 1990–Mar 31, 1991 — Amount Approved: 100.00 (SDR Million) — Amount Drawn: 48.00 (SDR Million)
  - Stand-By: Aug 30, 1988–Dec 31, 1989 — Amount Approved: 210.00 (SDR Million) — Amount Drawn: 210.00 (SDR Million)
  - Stand-By: Jan 31, 1992–Mar 31, 1993 — Amount Approved: 91.98 (SDR Million) — Amount Drawn: 18.40 (SDR Million)
- Projected payments to Fund (Charges/Interest; SDR Million):
  - 2010: 0.22
  - 2011: 0.22
  - 2012: 0.22
  - 2013: 0.22
- Exchange system specifics:
  - Exchange rate freely determined in the interbank foreign exchange market (created in 1996) with BAM interventions around a fixed central rate.

*IMF staff mission report (content unit: _cr1058 - 2009. The mission met with Minister).*

### 2009. The mission met with Minister

### _cr1058 - 2009. The mission met with Minister

### Overview
- Direct impact of the global crisis on Morocco has been limited, primarily through real channels (exports, tourism receipts, remittances, and FDI declined mainly due to the slowdown in Europe).
- Morocco entered the crisis with a strong starting position owing to macroeconomic and structural reforms over the last decade; financial system sound with little exposure to international markets.
- Authorities responded with moderate fiscal and monetary loosening and vigilant financial sector supervision to support confidence and domestic demand.
- Exceptional cereal harvest in 2009 contributed to strong real GDP growth; real GDP growth in 2009 should be strong.
- Short-term challenge (2010): support economic activity amid weak external environment; risks to growth are weighted to the downside, though a faster turnaround in Europe could raise nonagricultural growth.
- Medium-term priorities: boost growth and improve living standards; maintain macroeconomic stability; move gradually to more flexible monetary and exchange rate regime paired with structural reforms.
- Next Article IV consultation will be conducted on the standard 12-month cycle.
- The last Article IV consultation was concluded on July 23, 2008.

### I. Weathering the Global Crisis
- Key assessment:
  - Morocco has little financial exposure to international toxic assets.
  - FX-loans represent only 2.4 percent of total loans.
  - Reserve external debt and limited rollover/interest rate risks for the public sector.
  - Financial system sound and well capitalized with limited linkages to international financial markets; restrictions on capital outflows.
  - Bank funding largely deposit-based and dominated by domestic credit.
  - Foreign participation on the equity market is just over one-quarter of the total; over 70 percent of individual investors are Moroccan residents abroad.
  - Limited direct exposure of Moroccan banks to Dubai-related events; direct impact from Dubai World expected to be small.
- Crisis impact through real channels:
  - For the first half of 2009 relative to the same period in 2008:
    - Exports were down by 34 percent.
    - Tourism receipts fell by 14 percent.
    - Remittances fell by 12 percent.
    - FDI was down by 34 percent.
- Policy response and outcomes:
  - Fiscal balance shifted from a small surplus in 2008 to a deficit of about 2½ percent of GDP in 2009 due to tax rate reductions, civil servant wage increases, higher public investment, and targeted sector support.
  - Revenue fell sharply reflecting the downturn, tax policy changes, and absence of one-off factors present in 2008; offset in part by lower subsidies due to lower world commodity prices.
  - Bank Al-Maghrib (BAM) lowered its key policy rate by 25 basis points.
  - Reserve requirements were gradually reduced from 15 to 8 percent in 2009 to boost liquidity.
  - Real nonagricultural GDP growth of about 2½ percent expected for 2009; overall GDP growth in 2009 projected at around 5 percent owing to exceptional cereal harvest.

### II. Continued Headwinds in the Short Term
- External environment and outlook:
  - Growth in the euro zone is projected to be slightly positive but low in 2010, contributing to a gradual recovery of exports and remittances.
  - Low share of exports, notably manufactures, will likely mute the recovery in 2010 relative to countries with export-driven rebounds.
- Risks to growth:
  - Downside: further deterioration in terms of trade from an increase in oil prices or decline in phosphate prices; slower rebound in tourism and remittances due to prolonged Euro area weakness.
  - Upside: a more rapid recovery in Europe.
- Fiscal stance and policy measures for 2010:
  - Authorities plan further fiscal loosening; 2010 budget envisages a budget deficit of 4.4 percent of GDP to provide significant stimulus.
  - Stimulus measures include an additional increase of about ½ a percent of GDP in capital expenditure.
  - Strong investment programs in the public enterprise sector, including in the phosphate sector, will also boost demand.
  - Tax burden to be reduced via the second phase of income tax reform: increase in the income threshold of all tax brackets and reduced tax rates; tax revenue also expected to decrease due to slowed private sector activity in 2009 and 2010.
- Subsidy reform:
  - Authorities have taken early steps to reform the subsidy system: reduced volume of subsidized wheat and launched a pilot program to distribute targeted cash assistance.
  - Authorities intend to develop a global reform program to gradually eliminate universal subsidies in parallel with targeted support mechanisms.
- Financial sector vigilance:
  - Rapid credit growth of recent years has slowed to a more moderate pace.
  - After a sharp fall in recent years, nonperforming loans are likely to pick up moderately given the slowdown—authorities’ vigilance and attention to capital requirements are warranted.
  - Continuing implementation of Basle II is welcome.

### III. Looking Ahead: Boosting Growth and Improving Living Standards
- Medium-term challenges:
  - Potential growth of external demand, notably in Europe, has been revised downward.
  - Competitiveness concerns persist; a growth strategy hinging on domestic demand may not generate desired medium- and long-term growth rates.
- Policy priorities and reforms:
  - Maintain macroeconomic stability through sound fiscal policy; return to fiscal consolidation phased in gradually starting in 2011 to stabilize the public debt to GDP ratio, preserve low borrowing costs, and ease monetary policy implementation.
  - Move to a more flexible monetary and exchange rate regime over the medium term; prerequisites for a move to inflation targeting are largely in place, risk of imported inflation is now much less, and balance sheets have little exposure to exchange rate movements.
  - Structural reforms to improve productivity and competitiveness: improve business environment, strengthen physical infrastructure, and boost competitiveness of key sectors.
  - Public finance reforms: improve efficiency and composition of public spending to strengthen returns on public investment in human and physical capital.
  - Tax reforms: continue simplifying domestic and trade taxes to improve tax administration and encourage informal sector participation in the formal tax net.
  - Trade liberalization: further reduction in top rates and greater coherence of regional accords to reduce distortions.
  - Social sector: strengthen education and health services to address remaining low social indicators despite recent gains.
- Overall assessment:
  - Morocco has made significant progress over the last decade on macroeconomic stability, economic growth, and poverty reduction.
  - Short-term: pursue fiscal and financial sector policies that maintain domestic demand while limiting vulnerabilities in a fragile external setting.
  - Medium-term: increase economic flexibility, strengthen competitiveness, and raise per capita income to reduce poverty; a forceful approach to reforms is required.
  - Authorities have effectively responded to the global crisis and staff expect they will succeed in tackling these challenges.

*IMF staff mission report (content unit: _cr1058 - 2009. The mission met with Minister).*

### introduction of new targeted assistance to ensure

### introduction of new targeted assistance to ensure

### Financial sector: credit growth, NPLs, and vigilance
- Credit growth averaged 23 percent per year over the 2006–08 period, slowing to about 12 percent growth in 2009.
- The share of NPLs to total loans has fallen sharply over the last five years, with NPLs in nominal terms having remained broadly level.
- The low level of NPLs partly reflects balance-sheet clean-up: write-offs of old nonperforming loans that are fully provisioned and some restructuring of problem loans.
- Authorities and staff agreed that a moderate upturn in NPLs was to be expected, and that continued vigilance is needed.
- The authorities have launched initiatives to enhance information, including establishing a credit bureau managed by a private entity that is now operational and expanding its activities.
- Authorities are working on developing a real estate price index and periodic surveys to better understand asset price developments.

### Real estate sector
- Real estate credit represents 34 percent of total loans.
- Real estate credit grew by 20 percent (y-o-y) through October (growth has slowed in recent months).
- Although NPLs in the sector remain low and provisioning is high, the real estate sector warrants specific attention.
- In the short term, limited supply of new housing units due to zoning restrictions will continue to sustain prices.

### Macroprudential measures and Basel II implementation
- Implementation of Basel II continues, with priority given to Pillar 2 concerning supervision.
- For Pillar 1, the standardized approach was introduced in 2007; the authorities intend to move to the advanced approach beginning in 2011.
- The capital adequacy ratio (CAR) requirements for banks were raised at end-2008 from 8 to 10 percent of risk-weighted assets.
- In June 2009, the average CAR for the whole banking system was 11.7 percent.
- Authorities announced intention to raise this ratio to 12 percent for certain banking institutions, based on their risk profile, while taking into account the economic situation to avoid pro-cyclical effects.
- Staff noted credit growth remains brisk and encouraged openness to further adjustments to the CAR.

### Fiscal policy: consolidation and medium-term targets
- Authorities broadly agreed with staff that the public finance framework should be set within a medium-term outlook aimed at bringing the deficit below 3 percent of GDP to stabilize the debt-to-GDP ratio.
- Debt sustainability analysis indicates a growth shock or a combined real depreciation and contingent liabilities shocks could raise public debt by 7-9 percentage points by 2014.
- With the output gap negative (based on nonagricultural GDP), fiscal policy has appropriately become expansionary.
- Staff recommended starting in 2011 the authorities reduce the fiscal deficit gradually, returning to a deficit of 3 percent of GDP by 2012–13.
- The measure of the cyclically-adjusted fiscal balance mirrors closely the actual balance, suggesting the role of automatic stabilizers is small; fiscal adjustment will have to rely on policy changes.

### Exchange rate regime and inflation targeting
- The peg to the basket has contributed to macroeconomic stability, notably low inflation; staff analysis suggests the exchange rate is broadly in line with fundamentals.
- Other indicators point to a mild appreciation of the real exchange rate in 2009.
- Authorities’ medium-term objective: move to more flexibility in monetary and exchange rate policies; implementing an explicit inflation targeting framework combined with increased exchange rate flexibility could be beneficial.
- Staff noted timing for a move to a flexible regime may be opportune in the near term; the central bank broadly meets prerequisites for adopting inflation targeting.
- Preconditions for Inflation Targeting (as reported):
  - Central Bank Infrastructure (fulfilled): Data availability (√); Systematic forecast process (√); Models capable of conditional forecasts (√).
  - Institutional Independence (fulfilled): Central bank independence (√); Absence of fiscal obligation (√); Operational independence (√); Inflation-focused mandate (√); Favorable fiscal balance (√); Low public debt (√).
  - Financial Development (partially fulfilled): Solid capital adequacy ratio (√); Strong stock market capitalization (√); Depth of private bond market (—); Low currency mismatch faced by domestically owned banks (√); Even distribution of bond maturities (—).
  - Economic Structure (largely fulfilled): Low exchange rate pass-through (—); Low sensitivity to commodity prices (—); Low dollarization (√); Trade openness (√).
- Authorities expressed concern about increased exchange rate volatility and noted the broader policy framework still needs elaboration; staff and authorities agreed development of the financial system would strengthen a more flexible monetary framework.

### Structural reforms, competitiveness, and trade
- Wage bill remains over 10 percent of GDP; authorities expect reduced wage bill pressures as retirements pick up and due to a regulation eliminating vacant positions at the end of each budget year.
- A more comprehensive civil service reform is under discussion with the World Bank to modernize the civil service and reduce the wage bill weight.
- Staff encouraged further tax reform, including simplifying VAT and customs tariffs, reducing the number of rates and exemptions, and extending the scope of reimbursements for VAT credits; an overhaul of VAT rates could lead to a reduction in the normal rate with a neutral impact on revenue.
- As measured by the WTO, the average tariff fell to 20 percent in 2008 from 33 percent in 2002; the average effective tariff (customs revenue divided by total imports) is now at 5 percent.
- Morocco would benefit from further lowering top rates and consolidating rates to reduce complexity and improve administration; reduce high MFN import tax rates and ensure coherence of regional accords to avoid welfare-reducing trade diversion.
- Competitiveness challenges: indicators suggest some erosion of competitiveness relative to competitor countries; Morocco’s current account was in surplus from 2001–06 but has been in deficit since 2007.
- The trade balance reached a record high deficit of 22 percent of GDP in 2008.
- Recent developments: imports roughly twice exports in recent years; price effects (energy and raw materials) and import volumes drove import growth through 2008; phosphate export price spike in 2008; in 2009 exports fell more than imports in percentage terms, but the bigger weight of imports implies the trade balance is expected to improve moderately.

### Productivity, public investment, and social policies
- Authorities plan reforms of the justice system, increased infrastructure investment, and strengthened support for industry, tourism, and energy.
- Plan Vert aims to increase agriculture yields; government launched a similar effort to expand the fishing sector.
- Poverty rate fell from 15 percent in 2001 to 9 percent in 2007; overall unemployment has fallen, but youth unemployment remains problematic and literacy and other social indicators are low relative to peers.
- In 2005 the authorities launched the « Initiative nationale du développement humain », a program of more than $1 billion over 5 years.
- Education goals: universalize basic education by 2015 by improving enrollment and completion rates; increase graduation and employment rates and expand vocational training.
- Health goals: reduce infant and maternal mortality rates by developing a universally acceptable care package.
- Authorities are working closely with development partners, including the World Bank.

### Box highlights
- Box 1 — Spillovers from Europe to Morocco’s Economy:
  - Europe (especially France and Spain) plays an important role given geographical position, historical and cultural ties, and significant emigration.
  - Econometric estimations using quarterly GDP data suggest the correlation between the two economies is significant and has strengthened since 2000 (Association Agreement with EU).
  - VAR impulse-response suggests a variation in Europe’s GDP growth has a significant impact on Morocco’s non-agricultural GDP.
  - Authorities’ estimations suggest Morocco’s total GDP growth trend could be close to 5 percent; the 2010 Budget Law estimates the trend reached 4.8 percent after 2004.
- Box 2 — Contribution of the Public Enterprise Sector to the Economic Stimulus:
  - As of 2008 the sector comprised 716 public enterprises: 460 corporations with between 5 and 100 percent public ownership and 256 public service providers.
  - In 2008 they generated about 12 percent of total added value.
  - Their investment expenditure was 9.6 percent of GDP (almost twice the central government capital expenditure of 5.5 percent of GDP).
  - They employed 124.6 thousand persons (about 14 percent of total public sector employment), of which 39.5 thousand (about 4 percent of total public sector employment) are employed by public corporations.
  - In 2009 planned investment by public enterprises increased by over 16 percent and a further increase of 30 percent is foreseen in the 2010 budget allocations.
  - Public enterprise sector executed 91 percent of the investment budget in 2008; contribution to the 2010 stimulus depends on maintaining high execution rates.

*Source: INTERNATIONAL MONETARY FUND — MOROCCO, 2009 Article IV Consultation, Informational Annex (Prepared by the Middle East and Central Asia Department, December 23, 2009).*

### Annex I.   Relations with the Fund .....................................................................................

### Annex I.   Relations with the Fund

### I. Membership Status
- Joined: April 25, 1958
- Article VIII

### II. General Resources Account
- Quota: 588.20 (SDR Million) — 100.00 % Quota
- Fund holdings of currency: 517.76 (SDR Million) — 88.02 % Quota
- Reserve Position: 70.45 (SDR Million) — 11.98 % Quota
- Holdings Exchange Rate: [value not specified in source text]

### III. SDR Department
- Net cumulative allocation: 561.42 (SDR Million) — 100.00 % Allocation
- Holdings: 488.06 (SDR Million) — 86.93 % Allocation

### IV. Outstanding Purchases and Loans
- None

### V. Latest Financial Arrangements
- Stand-By: Jul 20, 1990–Mar 31, 1991 — Amount Approved: 100.00 (SDR Million) — Amount Drawn: 48.00 (SDR Million)
- Stand-By: Aug 30, 1988–Dec 31, 1989 — Amount Approved: 210.00 (SDR Million) — Amount Drawn: 210.00 (SDR Million)
- Stand-By: Jan 31, 1992–Mar 31, 1993 — Amount Approved: 91.98 (SDR Million) — Amount Drawn: 18.40 (SDR Million)

### VI. Projected Payments to Fund
(SDR Million; based on existing use of resources and present holdings of SDRs)
- Charges/Interest:
  - 2010: 0.22
  - 2011: 0.22
  - 2012: 0.22
  - 2013: 0.22
- Principal: [no principal amounts specified in source text]
- Total:
  - 2010: 0.22
  - 2011: 0.22
  - 2012: 0.22
  - 2013: 0.22

### VII. Exchange Rate Arrangement and Exchange System
- Morocco maintains an exchange system that is free of restrictions on the making of payments and transfers on current international transactions, except for certain restrictions relating to Iraq and the Federal Republic of Yugoslavia (Serbia and Montenegro) pursuant to UN Security Council Resolutions (subject to notification to the Fund in accordance with Decision 144 (52/51)).
- The exchange rate is freely determined in the interbank foreign exchange market, created in 1996.
- Bank Al-Maghrib (BAM) intervenes to maintain the exchange rate within its target range, defined around a fixed central rate.
- Morocco has a conventional peg arrangement.
- The Moroccan dirham is pegged to a basket of currencies comprising the euro and the U.S. dollar, with respective weights of 80 and 20 percent.
- BAM fixes daily rates for the rated currencies on the basis of variations on the value of the basket.
- Rates for most currencies quoted in Morocco are established on the basis of the daily dirham-euro rate and the cross rates for those currencies in relation to the euro in the international exchange markets.
- As of December 10, 2009, the SDR/dirham exchange rate was SDR 1=MAD 12.29.

### VIII. Article IV Consultation
- Morocco is on the 12-month cycle.
- Last discussions of the Article IV consultation were held in Rabat during May 19–30, 2008.
- Concluded by the Executive Board on July 23, 2008.

### IX. Technical Assistance
- November 2007 — World Bank-IMF — Financial System Stability Assessment—Update
- December 10–20, 2007: STA — GFSM Pilot Study
- June 24–July 7, 2008: STA — Improving Monetary and Finance Statistics, and Implementing the Standardized Reporting Forms.
- November 17–28, 2008: STA — Balance of Payments Statistics
- 2007–09: MCM — Peripatetic visits — Accounting, internal rating and bank supervision.
- January 27 to February 2, 2009: MCM — Stress Testing and Macroprudential Analysis
- April 19–30, 2009: STA — National Accounts Statistics
- September 22–October 5, 2009: FAD — Recent Revenue Developments: Analysis and Implications to Fiscal Policy

### X. Resident Representative
- None

*Annex I. MOROCCO: RELATIONS WITH THE FUND — As of November 30, 2009*

### ANNEX II. MOROCCO: RELATIONS WITH THE WORLD BANK GROUP

### ANNEX II. MOROCCO: RELATIONS WITH THE WORLD BANK GROUP

### JMAP Implementation, FY10 — Mutual Information and Work Programs
- Bank work program in next 12 months (all are FY10 activities; ongoing activities with multiple missions throughout the year):
  - Country Partnership Strategy.
  - Public Expenditure Review (PER) on health and education, with the support of a Public Expenditure and Financial Accountability (PEFA), completed, and a Country Governance and Anticorruption Strategy (CGAC), completed.
  - Procurement Review.
  - Sector work on:
    - Poverty and Social Impact Analysis of subsidy removal.
    - Reviewing Social Protection.
    - Transport, Energy and Electricity Transmission.
    - Gender and social inclusion.
    - Environment and Tourism.
    - Skills Development/Labor Market.
    - Climate change & mitigation Strategy.
  - Development Policy Lending on: Financial Sector, Public Admin. Reform IV, Education Sector, Energy Development Fund, Rural Roads Additional financing, Oum Er Rbia Irrigation and Oum Er Riba Sanitation.
  - Technical assistance on:
    - Port Trade Facilitation–Customs.
    - Public Sector reform.
    - Trade policy tools.
    - Pension Reform Follow-Up.
    - Business Climate.
- IMF work program in next 12 months (selected missions and expected timing):
  - 2009 Article IV Consultation: November 2-13 2009 (staff visit).
  - 2010 Article IV consultation: January 2010.
  - Technical assistance missions on:
    - MCM: Continued assistance on Basel II with a focus on market and operational risks — March 2010.
    - STA: Monetary and Financial Statistics — November 2010.
    - Additional technical assistance — March/April 2010; March 2010; January 2011.
- Requests for work program inputs:
  - Fund request to Bank: Developments on the subsidy reform; Sectoral analysis — As needed.
  - Bank request to Fund: Assessment of macroeconomic stance and prospects; Request for assessment letters to DPLs; Data sharing — Semiannual (and on ad hoc basis if requested).
  - Predicted Bank operations: At least 1 operation predicted.
- Joint products/missions next 12 months:
  - Continuous close coordination on the reform agenda — Ongoing.

### Statistical Issues (As of December 1, 2009)
- Assessment of Data Adequacy for Surveillance:
  - General: Data provision is adequate to conduct effective surveillance.
  - National accounts: Real sector data are adequate for surveillance.
  - Government finance statistics: Fiscal data are adequate for surveillance.
  - Balance of payments statistics: External sector data are adequate for surveillance.
  - Monetary and financial statistics: Adequate for surveillance; development of additional indicators (e.g., debt of households and corporations) would be desirable.
- Data Standards and Quality:
  - Morocco is a SDDS subscriber since December 2005.
  - Results of a data ROSC mission were published in April 2003 (Country Report No. 03/92).
- Table of Common Indicators (selected exact dates and frequencies as reported):
  - Exchange Rates: Date of latest observation 12/01/09; Date received 12/01/09; Frequency of Data D; Frequency of Reporting D; Frequency of publication D.
  - International Reserve Assets and Reserve Liabilities of the Monetary Authorities: Date of latest observation 10/30/09; Date received 12/01/09; Frequency M/M/M.
  - Reserve/Base Money, Broad Money, Central Bank Balance Sheet, Consolidated Balance Sheet of the Banking System: Date of latest observation 10/30/09; Date received 12/01/09; Frequency M/M/M.
  - Interest Rates: Date of latest observation 11/30/09; Date received 12/01/09; Frequency D/D/D.
  - Consumer Price Index: Date of latest observation 10/30/09; Date received 11/20/09; Frequency M/M/M.
  - Revenue, Expenditure, Balance and Composition of Financing – General Government: Date of latest observation 2008; Date received 06/30/2009; Frequency A/A/A.
  - Stocks of Central Government and Central Government-Guaranteed Debt: Q2, 2009; Date received 09/30/09; Frequency A/A/A.
  - External Current Account Balance: Q2, 2009; Date received 09/30/09; Frequency Q/Q/Q.
  - GDP/GNP: Q2, 2009; Date received 09/30/09; Frequency Q/Q/Q.
  - Gross External Debt: Q2, 2009; Date received 09/30/09; Frequency Q/Q/Q.
  - International Investment Position: 2008; Date received 09/30/09; Frequency A/A/A.
- Data quality footnotes (methodological soundness and accuracy and reliability) reflect the assessment provided in the data ROSC published on April 4, 2003, based on the mission during January 16–30, 2002, with classification codes O, LO, LNO, NO as applied in the table.

*Source: _cr1058 - ANNEX II. MOROCCO: RELATIONS WITH THE WORLD BANK GROUP*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2010/_cr1058.pdf_