Press Release No. 06/295

Press Release: IMF Managing Director Rodrigo de Rato's Statement at the Conclusion of his Visit to Morocco

December 21, 2006

Mr. Rodrigo de Rato, Managing Director of the International Monetary Fund (IMF), issued the following statement today in Rabat at the conclusion of his visit to Morocco:

"It has been a pleasure to return to Morocco, my second visit as Managing Director of the International Monetary Fund. In addition to participating in the important and productive conference on financial sector reforms and financial integration in the Maghreb, superbly hosted by the Moroccan government, I have had productive meetings with the Moroccan authorities, and had the opportunity to meet with the Algerian, Libyan, Mauritanian, and Tunisian delegations to the conference.

"The conference was preceded by a two-day technical meeting of officials from the five countries, representatives from the Arab Maghreb Union and the private sector, and IMF staff. This was the second conference on strengthening regional cooperation and fostering deeper economic integration in the Maghreb, following the November 2005 Algiers conference on trade facilitation. Discussions at this year's conference focused on financial sector reforms and prospects for financial integration in the Maghreb countries.

"The economic reforms that all five countries have undertaken in recent years have contributed to achieve macroeconomic stability and higher growth in most countries. In spite of these accomplishments, the region still faces the challenge of raising growth to levels compatible with lower unemployment and poverty reduction.

"All participants agreed that greater regional economic integration in the Maghreb is important in increasing the region's growth potential. It would create a regional market of more than 80 million consumers, similar in size to many large trading economies. It would also bring efficiency gains and enhance the region's attractiveness to investors.

"During this conference, high-level representatives from the Maghreb countries have assessed progress achieved over the past year in the area of trade facilitation and have adopted an action plan to facilitate trade within the region, which builds on the recommendations of last year's Algiers conference. Concerning regional cooperation on financial sector reforms and financial integration, participants agreed to continue to implement in each country the reforms needed to modernize the national financial sectors and, on the basis of a work program, to establish a committee of experts from all five countries to work on developing concrete measures to achieve progress in financial integration in the Maghreb.

"The participants have also agreed to hold the next conference in Tunis. This conference will focus on the role of the private sector in economic development and regional integration in the Maghreb.

"During my stay in Rabat, I had the privilege of meeting with the Prime Minister, Mr. Jettou, Minister of Finance and Privatization, Mr. Oualalou, and the Governor of Bank Al-Maghrib, Mr. Jouahri.

"Our discussions confirmed that we share many of the same views on Morocco's achievements and key remaining challenges. Recent economic performance clearly shows that the broad macroeconomic and structural reform effort undertaken since the mid-1990s is starting to bear fruit. After a decade of relatively low growth, per-capita GDP has risen significantly since the turn of the century, and unemployment has fallen considerably.

"Morocco's main challenge is to capitalize on these successes to complete its transformation into a buoyant emerging-market economy and raise the living standards of its population. The current strong macroeconomic conditions in Morocco and the favorable global environment provide a window of opportunity to tackle the remaining impediments to strong growth.

"Our discussions convinced me that the authorities have started addressing the most important issues. In particular, they have strengthened the implementation of their fiscal consolidation strategy, which is key to increase fiscal flexibility to deal with shocks, raise social and productive government expenditure, and boost private sector confidence. I also welcomed the positive developments in the area of trade liberalization, which include the coming into effect of free-trade agreements with the United States and Turkey, as well as with Tunisia, Egypt and Jordan in the context of the Agadir Agreement, and some multilateral tariff reductions. I congratulated the authorities on the adoption of an action plan to facilitate intra-Maghreb trade, in line with the recommendations of the November 2005 Algiers conference. I believe that the authorities' focus on increasing trade in services as the next step in their liberalization strategy is appropriate. Finally, I was pleased to note that the main recommendations of the 2003 Financial Sector Stability Assessment have been implemented and that the restructuring process for the two former state-owned banks is practically complete. The Moroccan financial sector has substantially strengthened over the past couple of years, and I trust that the ongoing reform efforts will continue to help the sector play its role as an engine of growth.

"The National Human Development Initiative, launched by His Majesty King Mohammed VI in May 2005, places human development issues at the center of the reform effort. This is an important endeavor, which will help ensure that economic prosperity benefits all Moroccans.

"I also had the opportunity to meet with the Algerian, Libyan, Mauritanian and Tunisian authorities, including from Algeria, Minister delegate for financial reforms Djoudi and Governor Laksaci, from Mauritania, Minister Cheikh-Sidia and Deputy Governor Ould Ally, from Tunisia, Minister Kechiche and Governor Baccar, and from Libya, Mr. Kachlaf, Advisor to the Governor. I congratulated them on the economic achievements in their respective countries and encouraged them to accelerate ongoing reforms aimed at increasing growth and reducing unemployment."