MOROCCO ECONOMIC MONITOR - Building Momentum for Reform Spring 2021 - World Bank Document
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Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Middle East and North Africa Region
Spring 2021
for Reform
MONITOR
MOROCCO ECONOMIC
Building Momentum
Morocco
Economic Monitor
Building Momentum for Reform
With a Special Focus on
COVID-19, Inequality, and Jobs in Morocco
June 2021
MOROCCO ECONOM
MONITO
Middle East and North Africa Region
From R
© 2021 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Cover photos used with the permission of Milton Louiz/ShutterStock.com (leather tannery), JackPhoto/ShutterStock.com (Casablanca, Morocco), Hoel/World Bank (Moroccan flag), and World Bank (school girls). Publication design and layout by The Word Express, Inc.
TABLE OF CONTENTS
Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Resume Synthétique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
امللخص التنفيذي. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
1. Recent Economic Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Morocco’s Successful Epidemiological Containment and Vaccination Campaign . . . . . . . . . . . . . . . . . . . . . . 1
An Uneven Economic Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Large Fiscal Impacts, but a Resilient External Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Monetary and Financial Sector Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2. Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Morocco’s Reform Momentum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Special Focus: COVID-19, Inequality, and Jobs in Morocco . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The Unequal Effects of COVID-19: Evidence from Across the Globe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Distributional Impact of the COVID-19 Pandemic in Morocco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Long-Term Trends in Morocco’s Labor Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
The Way Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Data Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Selected Recent World Bank Publications on Morocco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
iii
List of Figures
Figure 1 After a hard second Wave, Morocco has successfully contained the spread
of the pandemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Figure 2 The beginning of the vaccination campaign was a success, but it has lost pace
due to delivery constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Figure 3 The various components of production and demand Are unevenly contributing to
the recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Figure 4 Morocco’s 2020 recession was comparatively large . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Figure 5 Morocco’s budget deficit and public debt Have increased less markedly than in
neighboring Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Figure 6 Despite the increase in public debt, markets perceive that Morocco’s sovereign risk
remains Contained . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Figure 7 The various components of the current account Are recovering unevenly, and
external Buffers Have been bolstered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Figure 8 Absence of exchange rate and price pressures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Figure 9 The cumulative output loss caused by the crisis Is expected to be large . . . . . . . . . . . . . . . . . . . . .13
Figure 10 Employment status after confinement of workers who stopped working, by quintiles . . . . . . . . . .21
Figure 11 Annual change in working-age population and employment, 2001–2019 . . . . . . . . . . . . . . . . . . . . 23
Figure 12 Employment elasticities and dependency ratio over time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Figure 13 Labor status of the population in Morocco, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Figure 14 The profile of the inactive population, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Figure 15 Formal and informal wageworkers over time (a) and the profile of informal
Wageworkers in 2019 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Figure 16 Labor status of the population in Morocco, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Figure 17 Educational attainment of working-age population by labor force status, 2010 and 2018 . . . . . . 27
Figure 18 Variation of workers by sector in 2000 and 2019. b) Sectoral distribution of workers
by region in 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
List of Tables
Table 1 Morocco: Selected Economic Indicators, 2018–2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Table 2 Morocco: Key fiscal indicators 2015-2022 (in percent of GDP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
List of Boxes
Box 1 Second COVID-19 enterprise follow up survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Box 2 Covid-19 impact on tourism sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Box 3 Microsimulation analysis of the COVID-19 effects on the blue economy . . . . . . . . . . . . . . . . . . . . .22
iv MOROCCO ECONOMIC MONITOR – BUILDING MOMENTUM FOR REFORM
ACRONYMS
BAM Bank Al-Maghrib IOM International Organization for Migration
CAB Current Account Balance LPI Logistics Performance Index
CPI Consumer Price Index MENA Middle East North Africa
CCG Caisse Centrale de Garantie (Central MoF Ministry of Finance
Guarantee Agency) MSME Micro Small Medium Enterprises
COVID Coronavirus Disease NGO Non-Government Organization
DSA Debt Sustainability Analysis NPLs Non-Performing Loans
DB Doing Business PP Percentage Point
EMDEs Emerging Market Developing Economies PPE Personal Protective Equipment
EU European Union PPP Public-Private Partnership
FDI Foreign Direct Investment SNGFE Société Nationale de Garantie et de
GCC Gulf Cooperation Council Financement de l´Entreprise
GDP Gross Domestic Product SOEs State-Owned Enterprises
GoM Government of Morocco WBG World Bank Group
HDI Human Development Index WDI World Development Indicators
ICT Information and Communications WGI Worldwide Governance Indicators
Technology
vPREFACE
T
he Morocco Economic Monitor is a semi- and Eric Le Borgne (Practice Manager, MTI). The
annual report from the World Bank economic team is grateful for the comments, helpful inputs
team on recent economic developments and received from colleagues, in particular, Matina Deen
economic policies. This report presents our current on the impact of the crisis on the corporate sector,
outlook for Morocco given the recent COVID-19 and Gabriel Sensenbrenner (EFI Program Leader,
developments. Its coverage ranges from the macro- Maghreb), as well as senior staff from the Ministry
economy to business environment and private sector of Finance. Special thanks to Muna Salim (Senior
development. It is intended for a wide audience, Program Assistant, MTI) for her administrative
including policy makers, business leaders, financial support.
market participants, and the community of analysts The findings, interpretations, and conclusions
and professionals engaged in Morocco. expressed in this Monitor are those of World Bank
The Morocco Economic Monitor is a product staff and do not necessarily reflect the views of the
of the Middle East and North Africa (MENA) unit in Executive Board of the World Bank or the govern-
the Macroeconomics, Trade & Investment (MTI) ments they represent. For information about the World
Global Practice in the World Bank Group. The report Bank and its activities in Morocco, please visit www.
was prepared by Javier Diaz-Cassou, Amina Iraqi, worldbank.org/en/country/morocco (English), www.
Federica Alfani and Vasco Molini. The present edition worldbank.org/ar/country/morocco (Arabic), or www.
of this report has been prepared with data available banquemondiale.org/fr/country/morocco (French).
until May 30th 2021. For questions and comments on the content of this
The report was prepared under the direction of publication, please contact Javier Diaz Cassou (jdi-
Jesko Hentschel (Country Director for the Maghreb), azcassou@worldbank.org).
viiEXECUTIVE SUMMARY
M
orocco stands out as a country that enabled to enter markets, grow and create jobs; (ii) a
has seized the COVID-19 crisis as an more dynamic private sector could make a better use
opportunity to launch an ambitious of the large stock of physical capital accumulated over
program of transformative reforms. After its past decades, thus increasing the growth dividend of
initial efforts to mitigate the immediate effects of the existing infrastructure, which so far has disappointed;
pandemic on households and firms, the authorities (iii) accelerating the pace of human capital formation
have launched various policies to correct long- could enable more Moroccan citizens to realize their
standing inequities and overcome some of the productivity potential, which would contribute to
structural bottlenecks that have constrained the raise living standards and accelerate the growth of
performance of the Moroccan economy in the recent aggregate output.
past. This reform program has the following pillars: In the shorter-term, however, the recovery
(i) the creation of a Strategic Investment Fund (the from the crisis could be gradual and uneven.
Mohammed VI Fund) to support the private sector; Although activity picked up in the second half of
(ii) the overhaul of the social protection framework the year, 2020 closed with the largest economic
to boost human capital; (iii) the restructuring of recession on record. We project real GDP growth to
Morocco’s large network of State Owned Enterprises. rebound to 4.6 percent in 2021, supported by the
In addition, the government has recently unveiled strong performance of the agricultural sector and
the terms of a new development model that places by a partial recovery of the secondary and tertiary
significant emphasis on human development and sectors. In this baseline scenario, real GDP will not
gender equity, and on the need to reinvigorate recent return to its pre-pandemic level until 2022, and the
efforts to incentivize private entrepreneurship and cumulative output loss caused by the crisis will be
boost competitiveness. large. Moreover, the balance of risks remains tilted
If successfully implemented, these reforms to the downside given the global spread of new and
could lead to a stronger and more equitable more infectious coronavirus variants, the supply
growth path. There are various channels through constraints that are affecting Morocco´s vaccination
which the reform impetus described above could campaign, and the macro-financial vulnerabilities
increase the growth potential of the Moroccan triggered by the crisis.
economy: (i) by increasing market contestability, The large and unequal socio-economic
levelling the playing field, and streamlining the role of impact of the crisis were partly mitigated by the
the SOE sector in the economy, more firms would be extensive cash transfer programs rolled out during
ixthe lockdown period. In Morocco as elsewhere, However, these measures were temporary
poorer segments of the population have been more in nature, and a more structural approach will be
exposed to the health and economic consequences needed to ensure that the benefits of the post-
of the pandemic. As a result, the incidence of poverty COVID recovery will be evenly distributed. The
has increased after several years of sustained social Kingdom already announced a sweeping reform of the
progress and is not expected to return to pre-pandemic social protection system, including the universalization
levels until 2023. A peculiarity of the Moroccan case, of health insurance and family allowances. The long-
however, is that the mitigation measures adopted term challenges that characterize Morocco’s labor
by the authorities have successfully cushioned the markets will also need to be addressed, namely, its
income reduction that a large proportion of poorer insufficient capacity to create new jobs even when the
households (both formal and informal) would have economy is growing, high inactivity especially among
otherwise undergone, thus avoiding a significantly the young and the female population, and slowly
larger increase in poverty. declining levels of informality.
x MOROCCO ECONOMIC MONITOR – BUILDING MOMENTUM FOR REFORMRESUME SYNTHÉTIQUE
L
e Maroc se distingue comme étant un pays publiques dans l’économie, un nombre croissant
qui a su profiter de la crise du COVID-19 d´entreprises privées pourrait accéder aux marchés,
pour en faire une opportunité de lancer un croître et créer des emplois; (ii) un secteur privé plus
ambitieux programme de réformes transforma- dynamique pourrait faire un meilleur usage du large
trices. Après ses premiers efforts pour atténuer les stock de capital physique accumulé au cours des
effets immédiats de la pandémie sur les ménages et dernières décennies, augmentant ainsi les gains en
les entreprises, les autorités ont lancé diverses po- termes de croissance des infrastructures existantes,
litiques pour corriger des inégalités de longue date dont la performance a été jusqu’à présent décevante;
et surmonter certains obstacles structurels qui ont (iii) accélérer le rythme de formation du capital hu-
limité par le passé la performance de l’économie main pourrait permettre à plus grand nombre de ci-
marocaine. Ce programme de réformes repose sur toyens marocains de réaliser leur potentiel de produc-
les piliers suivants : (i) la création d’un Fonds d’inves- tivité, ce qui contribuerait à relever le niveau de vie et
tissement stratégique (le Fonds Mohammed VI) pour à accélérer la croissance économique.
soutenir le secteur privé ; (ii) la refonte du cadre de Cependant, à plus court terme, la reprise
protection sociale pour dynamiser le capital humain économique pourrait être progressive et
; (iii) la restructuration du vaste réseau d’entreprises irrégulière. Bien que l’activité ait repris au second
publiques marocaines. En outre, le gouvernement a semestre, l’année 2020 s’est clôturée avec la plus
dévoilé les termes d’un nouveau modèle qui met l’ac- grande récession économique jamais enregistrée.
cent sur le développement humain et l’équité entre Nous prévoyons que la croissance du PIB réel
les sexes, tout en redynamisant les efforts récents rebondira à 4,6 pour cent en 2021, soutenue par la
pour encourager l’entrepreneuriat privé et stimuler la bonne performance du secteur agricole et par une
compétitivité. reprise partielle des secteurs secondaire et tertiaire.
Si leur mise en œuvre est réussie, ces ré- Dans ce scénario de référence, le PIB réel ne
formes pourraient déboucher sur une trajec- reviendrait à son niveau d’avant la pandémie qu’en
toire de croissance plus forte et plus équitable. 2022 et la perte cumulative de production causée
Il existe différents canaux par lesquels les réformes par la crise serait importante. De plus, la balance des
décrites ci-dessus pourraient augmenter le potentiel risques à la baisse demeure prépondérante compte
de croissance de l’économie marocaine: (i) en aug- tenu de la propagation mondiale de nouveaux variants
mentant la contestabilité du marché, en renforçant la de coronavirus plus infectieux, des contraintes
concurrence et en rationalisant le rôle des entreprises d’approvisionnement qui affectent la campagne de
xivaccination du Maroc et des vulnérabilités macro- aurait autrement subi, évitant ainsi une augmentation
financières déclenchées par la crise. beaucoup plus importante de la pauvreté.
L’impact socio-économique important et Cependant, ces mesures ayant été de na-
inégal de la crise a été en partie atténué par les ture temporaire, une approche plus structurelle
vastes programmes de transferts monétaires mis serait nécessaire pour garantir que les avan-
en place pendant la période du confinement. tages de la reprise post-COVID soient plus uni-
Au Maroc comme ailleurs, les catégories de la formément répartis. Le Royaume a déjà annoncé
population les plus pauvres ont été plus exposées une réforme en profondeur du système de protection
aux conséquences sanitaires et économiques de la sociale, y compris la généralisation de l’assurance
pandémie. Par conséquent, l’incidence de la pauvreté maladie et des allocations familiales. Néanmoins,
a augmenté après plusieurs années de progrès les défis à long terme qui caractérisent le marché du
social soutenu et ne devrait revenir aux niveaux travail au Maroc doivent être relevés, à savoir sa ca-
d’avant la pandémie qu’en 2023. Une particularité pacité insuffisante pour créer de nouveaux emplois
du cas marocain est, cependant, que les mesures même lorsque l’économie est en croissance, une
d’atténuation adoptées par les autorités ont réussi à forte inactivité, en particulier parmi les jeunes et la
amortir la réduction des revenus qu’une grande partie population féminine, et l´insuffisante baisse des ni-
des ménages (formels et informels) les plus pauvres veaux d’informalité.
xii MOROCCO ECONOMIC MONITOR – BUILDING MOMENTUM FOR REFORMالملخص التنفيذي
منو إجاميل الناتج املحيل الحقيقي إىل 4.6يف عام ،2021مدعو ًما باألداء برز املغرب كدولة استغلت أزمة فريوس كورونا كفرصة إلطالق برنامج
الجيد للقطاع الزراعي واالنتعاش الجزيئ يف القطاعني الثانوي والثالث. طموح لإلصالحات التحويلية .بعد بذل الجهود األوىل للتخفيف من
يف ظل هذا السيناريو األسايس ،لن يعود الناتج املحيل اإلجاميل الحقيقي اآلثار املبارشة للوباء عىل األرس والرشكات ،أطلقت السلطات سياسات
إىل مستوى ما قبل الجائحة حتى عام 2022وستكون الخسارة الرتاكمية مختلفة لتصحيح التفاوتات طويلة األمد والتغلب عىل بعض العقبات
لإلنتاج الناجمة عن األزمة كبرية .باإلضافة إىل ذلك ،ال تزال مخاطر الجانب الهيكلية التي حدت من أداء االقتصاد املغريب يف املايض .يقوم برنامج
السلبي مرجح ًة نظ ًرا لالنتشار العاملي ملتغريات فريوس كورونا الجديدة اإلصالح هذا عىل الركائز التالية )1( :إنشاء صندوق استثامري اسرتاتيجي
واألكرث عدوى ،قيود العرض التي تؤثر عىل حملة التطعيم يف املغرب (صندوق محمد السادس) لدعم القطاع الخاص )2( .إصالح إطار الحامية
ونقاط الضعف عىل صعيد االقتصاد الكيل والصعيد املايل التي سببتها االجتامعية لتعزيز رأس املال البرشي؛ ( )3إعادة هيكلة الشبكة الواسعة
األزمة. للمؤسسات العمومية املغربية .باإلضافة إىل ذلك ،فإن الحكومة عىل
وشك الكشف عن رشوط منوذج التنمية الجديد الذي ينبغي أن يركز عىل
تم تخفيف جزئ ًيا األثر االجتامعي واالقتصادي الكبري وغري املتكافئ لألزمة التنمية البرشية ،املساواة بني الجنسني وإعادة تنشيط الجهود لتشجيع
من خالل برامج التحويالت النقدية الكبرية التي تم وضعها خالل فرتة مبارشة األعامل الحرة وتحفيز التنافسية.
ا العزل .يف املغرب كام يف بلدان أخرى ،.كانت الفئات األشد فقرا ً من
السكان أكرث تعرضاً للعواقب الصحية واالقتصادية للوباء .ونتيجة لذلك، قد تؤدي هذه اإلصالحات إىل مسار منو أقوى وأكرث إنصافًا إذا نجح
زاد معدل انتشار الفقر بعد عدة سنوات من التقدم االجتامعي املستمر، تنفيذها .هناك قنوات مختلفة ميكن من خاللها أن يؤدي الدافع
وال يُتوقع أن يعود إىل مستويات ما قبل الجائحة حتى عام .2023ومع لإلصالحات املوصوفة أعاله إىل زيادة إمكانات النمو لالقتصاد املغريب)1( :
ذلك ،فإن خصوصية الحالة املغربية هي أن تدابري التخفيف التي اتخذتها من خالل زيادة التنافس يف السوق ،من خالل إتاحة فرص متكافئة لجميع
السلطات نجحت يف التخفيف من انخفاض الدخل الذي كان سيشهده فعاليات السوق ومن خالل ترشيد دور املؤسسات العمومية يف االقتصاد
جزء كبري من أفقر األرس (الرسمية وغري الرسمية) ،وبالتايل تجنب زيادة املغريب ،ميكن ملزيد من الرشكات الوصول إىل األسواق والنمو وخلق فرص
أكرب يف الفقر. العمل؛ ( )2ميكن لقطاع خاص أكرث ديناميكية أن يستخدم بشكل أفضل
املخزون الكبري من رأس املال املادي املرتاكم عىل مدى العقود املاضية،
ومع ذلك ،كانت هذه التدابري مؤقتة بطبيعتها ،وستكون هناك حاجة وبالتايل زيادة املكاسب من حيث منو البنية التحتية ،والتي كانت مخيبة
إىل نهج أكرث هيكلية لضامن توزيع متساوي لفوائد االنتعاش االقتصادي. لآلمال حتى اآلن؛ ( )3ميكن أن يسمح ترسيع وترية تكوين رأس املال
أعلنت اململكة بالفعل عن إصالح معمق لنظام الحامية االجتامعية ،مبا البرشي ملزيد من املواطنني املغاربة بتحقيق إمكاناتهم اإلنتاجية ،مام
يف ذلك تعميم التأمني الصحي و االستحقاقات األرسية .يجب معالجة سيساعد عىل رفع مستويات املعيشة وترسيع منو اإلنتاج الكيل.
التحديات طويلة املدى التي متيز سوق العمل يف املغرب ،وهي عدم
كفاية قدرته عىل خلق وظائف جديدة حتى مع منو االقتصاد ،عدم ومع ذلك ،قد يكون االنتعاش االقتصادي تدريجيًا وغري منتظم عىل املدى
النشاط خصوصا يف صفوف النساء والشباب ،واالنخفاض التدريجي يف القصري .عىل الرغم من انتعاش النشاط يف النصف الثاين من العام ،إال أن
مستويات التوظيف غريرسمية. سنة 2020عرفت أكرب ركود اقتصادي عىل اإلطالق .نتوقع أن ينتعش
xiii1
RECENT ECONOMIC
DEVELOPMENTS1
T
he Moroccan economy is exhibiting some to contain the spread of the pandemic. Partly be-
encouraging trends, sustained by a marked cause of the stringent social distancing measures ad-
improvement in the epidemiological situation, opted by the authorities during a 12 week-long lock-
the successful beginning of the vaccination campaign, down, the first wave of the pandemic was relatively mild
the strong performance of certain export-oriented sectors (Figure 1).2 However, cases began to pick up soon after
and, to a lesser extent, a rise in private consumption. the deconfinement was launched in mid-June, and the
However, the recovery is far from complete, and year second wave of the pandemic ended up taking a heavier
2020 closed with the largest contraction of real GDP toll than the first one.3 In December 2020 the epidemio-
on record. Moreover, recent surveys indicate that the logical situation reached a turning point, as the number
corporate sector is still struggling and the stock of of cases began to decline markedly. By February and
nonperforming loans (NPLs) is on the rise, which may March, the emergency was brought under control, and
delay the recovery of private investment. Despite the
government’s prudent fiscal response to the shock, 1
The present edition of this report was prepared with data
the debt-to-GDP ratio increased markedly in 2020. In available until May 30th 2021.
turn, the evolution of Morocco’s external position has 2
In stark contrast with Morocco’s northern neighbors, the
been strengthened by a partial recovery of exports, a number of confirmed cases rose moderately during the
sharp contraction of imports, an increase in workers’ first wave, from 617 in March to 4,423 in April and 7,807
remittances and maintained access to external finance. in May. In terms of infections and deaths, Morocco was
among the best performers in the MENA region, and
In the current context of below potential economic
compared favorably even with Australia and South Korea.
activity, price pressures remain subdued despite an 3
Confirmed contagions increased gradually from an
expansionary monetary policy stance. average of 784 new daily cases in the last week of July
and reached a peak of 6,195 new daily cases in November
12th. The number of new infections started to decline in
Morocco’s Successful Epidemiological
December, with on average 2,672 new daily cases in that
Containment and Vaccination month, 1,031 cases in January, 446 in February, and 401
Campaign in March. The number of deaths followed suit with an
average of 25 daily COVID-19 related fatalities in August,
After a sharp increase in COVID-19 cases between 35 in September, 48 in October, 71 in November, 49 in
September and November, Morocco has managed December, 28 in January, 12 in February and 6 in March.
1FIGURE 1 • After a hard second Wave, Morocco has successfully contained the spread of the pandemic
Cumulative confirmed COVID-19 cases per million people Cumulative confirmed COVID-19 deaths per million people
The number of confirmed cases is lower than the number of actual Limited testing and challenges in the attribution of the cause of death
cases; the main reason for that is limited testing. means that the number of confirmed deaths may not be an accurate
120,000 count of the true number of deaths from COVID-19.
100,000 2,000
1,800
80,000 1,600
1,400
60,000 1,200
1,000
40,000 800
600
20,000 400
200
0 0
Feb-20 May-20 Aug-20 Nov-20 Feb-21 May-21 Feb-20 May-20 Aug-20 Nov-20 Feb-21 May-21
United States European Union Jordan United States European Union Jordan
United Kingdom Tunisia Libya United Kingdom Tunisia Libya
Morocco Algeria South Korea Morocco Algeria South Korea
Australia Australia
Source: Johns Hopkins University CSSE COVID-19 Data.
new COVID-19 variants seem to be posing less of a chal- Morocco delivered an average of about 0.1 daily doses
lenge in Morocco than in other countries. The progres- per 100 people. The pace of the campaign picked up
sive reintroduction of travel restrictions (at the time of afterward, surpassing 0.5 doses daily per 100 people
writing, international flights are suspended with 54 coun- in mid-March (more than 200,000 inoculations per
tries, including most of the European Union) may con- day). As of May 15, 2021, Morocco has administered
tribute to explain the slow spread of these new variants. 10.6 million doses, or about 29.3 doses per 100
Morocco has launched an ambitious inhabitants (Figure 2). This places the Kingdom in the
vaccination campaign. On January 28, 2021, the first position in Africa, the fourth in the MENA region
authorities initiated a nationwide vaccination program (after the United Arab Emirates, Bahrein, and Qatar),
aimed at covering 80 percent of the adult population and in the 16th position globally.
(around 25 million citizens) within the first Semester However, Morocco´s vaccination campaign
of 2021. For that purpose, the country announced the confronts delivery constraints. India´s decision to
purchase of a sufficient number of vaccines to inoculate suspend exports has affected the countries that were
its entire eligible population, mostly from Sinopharm more reliant on the doses produced by the Serum
and AstraZeneca, in addition to Morocco’s allocation Institute of India, including Morocco. In addition, the
from COVAX Advanced Market Commitment. The Kingdom has received less doses of the Sinopharm
country has so far received close to 18 million doses vaccine than originally anticipated. These delivery
from AstraZeneca (Covishield) and Sinopharm. The delays reduced the pace of the vaccination campaign,
groups targeted by the first phase of the vaccination which dropped to 0.1 doses per 100 inhabitants in mid-
campaign are health professionals over the age of 40, April. However, the recent arrival of new doses from
public authorities, the Royal Armed Forces, teachers Sinpharm has enabled the authorities to reaccelerate
over 45 and people over 75 in the most affected areas. the vaccination campaign, and the government
On February 23, 2021, the campaign was expanded to has launched additional procurement processes to
include all the population above the age of 60, as well diversify their supply base, with negotiations going on
as individuals with comorbidities, and on May 8th it was with the producers of the Sputnik V and the Johnson
further extended to the population above the age of 50.. and Johnson vaccines. In any case, these events
The vaccination campaign has so far been a serve as a reminder that, despite the highly effective
success. From January 29, 2021 to February 9, 2021, logistical arrangements that have been put in place,
2 MOROCCO ECONOMIC MONITOR – BUILDING MOMENTUM FOR REFORMFIGURE 2 • The beginning of the vaccination campaign was a success, but it has lost pace due to
delivery constraints
COVID-19 vaccine doses administered per 100 people Daily COVID-19 vaccine doses administered per 100 people
Total number of vaccination doses administered per 100 people in the Shown is the rolling 7-day average per 100 people in the total
total population. This is counted as a single dose, and may not equal population. This is counted as a single dose, and may not equal the
the total number of people vaccinated, depending on the specific dose total number of people vaccinated, depending on the specific dose
regime (e.g. people receive multiple doses). regime (e.g. people receive multiple doses)
100 0.8
80 0.7
60 0.6
40 0.5
20 0.4
0 0.3
12/17/20
12/24/20
12/31/20
1/7/21
1/14/21
1/21/21
1/28/21
2/4/21
2/11/21
2/18/21
2/25/21
3/4/21
3/11/21
3/18/21
3/25/21
4/1/21
4/8/21
4/15/21
4/22/21
4/29/21
5/6/21
5/13/21
5/20/21
5/27/21
0.2
0.1
0
1/29/21
2/5/21
2/12/21
2/19/21
2/26/21
3/5/21
3/12/21
3/19/21
3/26/21
4/2/21
4/9/21
4/16/21
4/23/21
4/30/21
5/7/21
5/14/21
5/21/21
5/28/21
Algeria European Union Morocco
Tunisia United Kingdom United States
Source: Official data collated by Our World Data.
the ultimate success of Morocco´s vaccination coincides with the lockdown, real GDP fell by an un-
campaign also hinges upon factors that are beyond precedented 15.1 percent y-o-y. On the production
the control of the authorities. side, the decline was more pronounced in the sec-
ondary sector (–17.3 percent y-o-y), driven by the
underperformance of the manufacturing industry
An Uneven Economic Recovery (–22 percent), mechanical, metallurgical and elec-
trical industries (–53.6 percent), textiles and leather
The COVID-19 shock triggered the most abrupt (–46.7 percent). In turn, the tertiary sector contracted
economic contraction since records began. by 14.9 percent of GDP y-o-y, with a particularly se-
During the second quarter of 2020, which broadly vere impact for activities related with tourism, such
FIGURE 3 • The various components of production and demand are unevenly contributing to
the recovery
Consumption, year on year Consumption, quarter on quarter
10% 15%
5% 10%
0% 5%
0%
–5%
–5%
–10% –10%
–15% –15%
–20% –20%
2018:1
2018:2
2018:3
2018:4
2019:1
2019:2
2019:3
2019:4
2020:1
2020:2
2020:3
2020:4
2018:1
2018:2
2018:3
2018:4
2019:1
2019:2
2019:3
2019:4
2020:1
2020:2
2020:3
2020:4
Private Consumption Public Consumption Private Consumption Public Consumption
Gross Capital Formation Net Exports Gross Capital Formation Net Exports
GDP GDP
(continued on next page)
Recent Economic Developments1 3FIGURE 3 • The various components of production and demand are unevenly contributing to
the recovery (continued)
Production, year on year Production, quarter on quarter
5% 15%
10%
0%
5%
–5% 0%
–10% –5%
–10%
–15%
–15%
–20% –20%
2018:1
2018:2
2018:3
2018:4
2019:1
2019:2
2019:3
2019:4
2020:1
2020:2
2020:3
2020:4
2018:1
2018:2
2018:3
2018:4
2019:1
2019:2
2019:3
2019:4
2020:1
2020:2
2020:3
2020:4
Primary Sector Secondary Sector Primary Sector Secondary Sector
Tertiary Sector GDP Tertiary Sector GDP
Source: HCP.
as hotels and restaurants (–90 percent) or transport This partial recovery was insufficient to avoid
(–55.7 percent). Finally, the primary sector contract- a comparatively large overall contraction of GDP in
ed by 8.2 percent y-o-y, mostly because of the com- 2020. Despite the encouraging trends observed in the
pounding effect of a severe drought on agricultural second semester, real GDP declined by 7.1 percent last
production. On the demand side, private consump- year.4 From an international perspective, Morocco´s
tion and investment dropped by 21.2 and 11 percent recession was milder than that of the European
respectively, which was partially compensated by a Union, advanced economies and Latin American and
5.8 percent increase in government consumption. Caribbean economies, but larger than that estimated
Economic activity has recovered some for the world economy as a whole, for the MENA region
dynamism during the second semester, driven and for Sub-Saharan Africa (Figure 4). There are various
primarily by external demand. The performance factors that contribute to explain the comparatively large
of the secondary sector was particularly robust magnitude of the Moroccan recession including: (i) the
(+15.4 percent q-o-q in the third quarter and aforementioned underperformance of the agricultural
+10.1 percent in the fourth), followed by the tertiary sector in a year of drought (the production of cereals
sector (+9.1 percent and +1.9 percent). The primary fell by 39 percent); (ii) a stringent confinement that
sector, instead, continued its slide during the second succeeded in controlling the pandemic, but implied
half of the year (-1.6 percent q-o-q in the third quarter a sudden stop for several economic activities; (iii) the
and –3.4 percent in the fourth) owing to the poor impact that the disruption of global value chains had for
performance of agricultural production. On the Morocco´s emerging manufacturing sectors during the
demand side, the recovery has been driven primarily early stages of the pandemic, and the deep recessions
by exports, which expanded by 31.4 percent q-o-q on undergone by southern European countries, the most
the third quarter (+5.1 percent in the fourth), and to a relevant markets for the Kingdom’s exports; (iv) the
lesser extent by private consumption (+12.9 percent
q-o-q in the third quarter and +7.2 percent in the fourth 4
On the production side, the primary sector contracted
quarter). Despite the resiliency of public investment, by 7 percent (mostly unrelated to COVID), the secondary
sector by 5.6 percent and the tertiary sector by 5.6%.
gross capital formation has been less dynamic
On the demand side, private consumption declined by
(especially during the third quarter, with a +3.3 percent 8.7 percent, gross capital formation by 8.6 percent, net
expansion q-o-q), and public consumption declined exports of goods and services by 1.3 percent, while
during the second semester. public consumption increased by 4.4 percent.
4 MOROCCO ECONOMIC MONITOR – BUILDING MOMENTUM FOR REFORMFIGURE 4 • Morocco’s 2020 recession was comparatively large
Real GDP Growth in 2020 (%) Real GDP Growth (q-o-q)
20%
MENA developing oil importers 15%
EMDEs 10%
MENA developing oil exporters 5%
0%
SSA –5%
MENA –10%
MENA GCC –15%
Advanced economies –20%
2019-Q1
2019-Q2
2019-Q3
2019-Q4
2020-Q1
2020-Q2
2020-Q3
2020-Q4
Algeria
LAC
Morocco
Euro Area France Germany Italy
Tunisia European Union Spain Morocco
–10 –5 0 United States
Source: World Bank MPO (April 2021) and OECD Stats.
relatively large weight of the Moroccan tourism sector, Follow Up Survey). Indeed, according to the latest
whose revenues have been particularly affected by crisis. HCP survey, almost 50 percent of Moroccan firms
The private sector has not yet recovered
from the shock. The decisive government response 5
As was discussed in detail in the previous edition of this
to the crisis has so far avoided the wave of corporate report (Fall, 2020), the Moroccan government put in place
bankruptcies that could have otherwise taken various measures to help the formal private sector weather
place.5 However, the various surveys that are being the crisis, including the deferral of corporate income tax
and social contribution payments, direct transfers to
conducted to monitor the situation of the corporate
employees, public credit guarantees to support firms´
sector still paint a challenging picture (see Box 1 working capital, an expansionary monetary policy and
for the results of the second World Bank Enterprise liquidity injections to the banking system.
BOX 1. SECOND COVID-19 ENTERPRISE FOLLOW UP SURVEY
The World Bank Group has conducted three consecutive surveys that help monitor the impact of COVID-19 on a representative sample of
firms in the Moroccan formal private economy: one just prior to the pandemic outbreak (December 2019), one in July-August 2020, and a
last one in February 2021. The results of the second survey were analyzed in detail in the Fall edition of Morocco´s Economic Monitor. This
box summarizes the key trends observed in the last survey, conducted nearly a year after the first case of COVID-19 was detected in Morocco.
The second follow-up survey confirms that Moroccan formal firms continue to bear the full brunt of the crisis: the share of respondents declaring
to have permanently closed their operations has increased from 6 to 10 percent since the first follow-up survey conducted over the summer; 86
percent of firms report to be experiencing a decline in demand for their products (82 percent in the previous survey); 92 percent of firms have
seen a deterioration in their liquidity situation, against 72 percent in the previous survey. In addition, the share of firms reporting a decline in their
turnover has fallen slightly, although it remains overwhelming: 86 percent, compared to 87 percent in August 2020. On a more positive note,
the average contraction in respondent firms´ turnover has decreased from 47 to 39 percent. Overall, small- and medium-size firms report worse
indicators than larger companies, suggesting that the impact of the crisis continues to be unequally distributed also in the corporate sector.
The new survey confirms that, at least in the formal sector, Moroccan firms have tended to adjust along the intensive margin of labor utilization
rather than resorting to permanent layoffs of employees. Indeed, while 54 percent of respondents declare to have reduced the numbers of
hours worked in their firms (50 percent in the previous follow up survey), their permanent full-time workforce has declined by only 3 percent
(5 percent in August 2020). Another relevant trend is the substantial increase in the number of firms that reported receiving some form of
governmental support: 37 percent in February 2021, against 20 percent in August 2020. The most common form of governmental support
has been wage subsidies, followed by tax relief and direct transfers. Interestingly, despite their worsening liquidity situation, few respondents
consider that a facilitated access to new credit is among the forms of public support that their firm needs most at this juncture of the crisis.
Recent Economic Developments1 5are concerned about their future solvency, more was put forward in the aftermath of the global and
than 16 percent of companies were in permanent or Euro area crises was appropriately discontinued.
temporary shutdown at the end of 2020, 40 percent Indeed, soon after the pandemic outbreak, the
of companies completely lack cash buffers, and authorities made space for additional expenditures
8 percent have reserves allowing them to hold for less (mostly targeted to the health sector and to cash
than a month.6 This complex scenario has hindered the transfers in favor of formal and informal workers)
recovery of private investment, which could constrain while accommodating the impact of the collapse in
future economic growth, providing a solid justification economic activity on tax revenue collection (which
for the government’s effort to deploy the Mohammed contracted by 6.5 percent in 2020). As a result, in
VI Fund (see next chapter for more details). Among 2020 the overall deficit increased to 7.7 percent of
the indicators that illustrate this sluggish recovery GDP from 3.6 percent of GDP in 2019. An increase
of private investment are: (i) the evolution of capital of that magnitude in the fiscal deficit, however,
goods´ imports, which contracted by 13.6 percent compares favorably with all the other northern African
in 2020, and in January-February 2021 were still economies, with the average for the MENA region,
6.9 percent below their level of these same two and is far below that observed in most advanced
months of 2020 (source: Office des Changes); (ii) the economies (Figure 5). This reflects the prudent fiscal
evolution of banks´ investment loans to private firms, approach that has been prioritized by the authorities,
which continue to decline in the last quarter of 2020 and the mobilization of contributions from banks,
and in January 2021 in spite of the overall expansion wealthy individuals, private firms and SOEs to the
of credit to the private sector, which is being driven extrabudgetary special COVID-19 fund that has
primarily by liquidity loans (Source: Bank Al-Maghrib) covered the cost of upgrading the health system and
The crisis is also leading to a temporary supporting households.7
increase in poverty and vulnerability. As will be The recession and the large fiscal deficit
discussed in more detail in the Special Focus of this have led to a marked increase in the debt-to-
report, the socioeconomic impact of the pandemic is GDP ratio. Central government debt increased
large, persistent, and unequally distributed. According from 65.4 percent in 2019 to 77.7 percent of GDP in
to the latest World Bank estimates (Macro Poverty 2020 (Figure 5).8 The authorities have continued to
Outlook, April 2021), the crisis may have pushed more rely primarily on the domestic debt market to cover
than half a million additional Moroccan citizens below its financing needs, with issuances that averaged
the US$3.2 PPP poverty line in 2020, increasing the 12.7 billion MAD per month throughout 2020 (almost
poverty rate from 5.8 percent to 7.1 percent and the 14.1 percent of GDP cumulatively). As a result, the
vulnerability rate from 26.1 to 29.6 percent, after several domestic debt ratio has increased by 7.9 percentage
years of sustained social progress in the country. As points of GDP. The central government has also gone
will be discussed in the Special Focus of this report, at great length to mobilize credit from multilateral
this increase in poverty would have been higher hadn’t institutions and international financial markets, leading
it been for the cash transfer programs to formal and to a net increase in external debt for an amount of
informal workers that were put in place by the authorities
during the lockdown period.
6
HCP: Effets du Covid-19 sur l’activité des entreprises –
3ème enquête -Janvier 2021
Large Fiscal Impacts, but a Resilient 7
The special COVID-19 Fund amounted to about 3.1
External Position percent of GDP, and the contribution from the central
government amounted to close to 1 percent of GDP.
8
Morocco’s consolidated general government debt at the
Faced with the pandemic’s health, social, and
end of 2019 stood at 56.4 percent of GDP (56 percent of
economic impact, the government launched a GDP in 2018 and 54.1 percent of GDP in 2017), almost
targeted counter-cyclical policy. With the onset of 10 percentage points lower than the central government
the pandemic, the fiscal consolidation process that debt-to-GDP ratio.
6 MOROCCO ECONOMIC MONITOR – BUILDING MOMENTUM FOR REFORMFIGURE 5 • M
orocco’s budget deficit and public debt have increased less markedly than in neighboring
countries
Fiscal Deficit (% of GDP) !
Public Debt (% of GDP)
142
–16.4
104.3 102.3
–11.5
–11.3
91.8 87.2
–9.9
–9.6
–10
–9.4
–9.5
77.7 77
–7.7
–7.5
–7.7
–6.6
–4.2 59.7 51.4
–3.6
–3.6
–3.6
–3.1
–2.9
–1.6
–3
MENA developing
oil exporters
Italy
Morocco
France
MENA developing
oil importers
Spain
MENA
MENA developing
oil importers
Italy
Tunisia
France
Morocc o
Tunisia
MENA developing
oil exporters
MENA GCC
MENA GCC
Spain
Algeria
Algeria
2019 2020 2019 2020
Source: World Bank MPO (April 2021), World Bank MENA Economic Update (April 2021), IMF.
5 percent of GDP. SOEs add an additional 16 percent October 2020 and April 2021, Morocco is no longer
of GDP to Morocco’s public external debt (most of rated investment grade by any of the three major
which is guaranteed by the sovereign), although, as agencies. So far, however, these downgrades have had
opposed to the central government’s debt, the value little impact on sovereign spreads (EMBIG) or on the
of these obligations decreased in 2020. price of Credit Default Swaps (Figure 6). Furthermore,
Despite recent credit rating downgrades, Morocco’s December US$3 billion sovereign bond
the sovereign has retained significant access issuance was a success, and like September’s
to international financial markets. After Fitch’s €1 billion issuance, it was largely oversubscribed and
and Standard and Poor´s negative rating actions in carried moderate coupons.
FIGURE 6 • Despite the increase in public debt, markets perceive that Morocco’s sovereign risk remains
contained
(% of GDP) EMBI and CDS Prices
450 450
77.7 400 400
350 350
63.4 63.7 64.9 65.1 65.2 64.9 250 250
61.7 58.5 200 200
49.2 50.4 50.6 51.7 50.7 150
47.1 47.9 150
100 100
50 50
0 0
19.1
Dec-31-19
Jan-31-20
Feb-29-20
Mar-31-20
Ap r-30-20
May-31-2 0
Jun-30-20
Jul-31-20
Aug-31-20
Sep-30-20
Oct-31-20
Nov-30-20
Dec-31-20
Jan-31-21
Feb-28-21
Mar-31-21
14.6 15.5 14.5 14.5 14.5 13.5 14.2
2013 2014 2015 2016 2017 2018 2019 2020 EMBI Global Diversified (lhs)
CDS 5Y (USD)
External Domestic Central Government Debt CDS 10Y (USD)
Source: World Bank MPO (April 2021) and Macrobond.
Note: the EMBI spread compares the return of Moroccan international bonds with those of comparable US Treasury securities.
CDSs are a financial derivative that allows investors to offset credit risk, and their price indicates perceived risks of default.
Recent Economic Developments1 7FIGURE 7 • The various components of the current account are recovering unevenly, and external
buffers have been bolstered
15
30 Gross Official Reserves (MAD billion)
10
5 10 400
0
(y-o-y %)
(y-o-y %)
–10 300
–5
–10 –30 200
–15
–50 100
–20
–25 –70 0
January
February
March
April
May
June
July
August
September
October
November
December
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Remittances Exports Imports
Tourism Revenues (RHS) 2020 2019
Source: Office des Changes.
Morocco´s external position has been Line (PLL) arrangement with the IMF (approximately
more resilient than originally anticipated. Despite US$3 billion). In the aftermath of that disbursement,
the COVID-19 shock, the current account deficit is reserves continued to edge upwards, reaching
estimated to have closed 2020 with a deficit of just almost 30 percent of GDP by year-end (more
1.5 percent of GDP, down from 3.7 percent of GDP than 7.5 months of imports, up from 5.4 months of
in 2019. During the first stage of the pandemic, a imports at the beginning of 2020) and US$35 billion
plummeting external and domestic demand quickly at the end of January 2021(Figure 7). The increase
affected all components of the current account, and in reserves was made possible by the better than
in particular exports, the value of which declined by anticipated performance of the current account, large
almost 25 percent between the second quarter of 2019 multilateral disbursements, two successful sovereign
and the same period of 2020. However, Morocco’s bond issuances in international financial markets and
exports of goods began to recover in the second half of relatively resilient net foreign direct investment (FDI)
the year, limiting the annual contraction to 7.6 percent, flows. As a result, the government decided to bring
although tourism revenues have remained depressed forward the partial repayment of the IMF´s PLL for
(Figure 7). The recovery of imports has picked up at an amount of close to US$ 936 million, a repurchase
a much slower pace, posting an overall decline of that was made effective on January 8th, 2021.
14 percent for goods and 31.4 percent for services
in 2020. Workers’ remittances increased by 5 percent
in 2020, reaching an unprecedented 6.4 percent of
Monetary and Financial Sector
GDP, which has contributed to ease the impact of the
Developments
crisis not only on households but also on the balance
Morocco’s resilient external position has translated
of payments (Figure 7).9
into an absence of exchange rate pressures.
After an initial decline following the
As part of a transition towards an inflation targeting
onset of the pandemic, the stock of foreign
monetary framework (discontinued in the context of the
exchange reserves recovered. During the first
pandemic), the central bank has relaxed its exchange
weeks of the pandemic, international reserves fell
rate peg to the euro and the US dollar, with the
by 4 percent (from US$26.4 billion on March 6,
2020 to US$25.3 billion on March 20, 2020). This
trend was reversed when Morocco purchased all 9
For a qualitative review of workers’ remittances in
available resources under its Precautionary Liquidity Morocco, wee World Bank (2021).
8 MOROCCO ECONOMIC MONITOR – BUILDING MOMENTUM FOR REFORMFIGURE 8 • Absence of exchange rate and price pressures
Nominal Exchange Rate (MAD/$) Consumer Price Index (CPI)
10.5 4
10.0 3
9.5 2
% (y-o-y)
9.0 1
0
8.5
–1
8.0
Feb-Mid
Mar-Mid
Apr-Mid
May-Mid
June-Mid
Jul-Mid
Jul-28
Aug-Mid
Sep-1
Sep-22
Sep-25
Oct-8
Oct-13
Oct-27
Nov-10
Nov-25
Dec-9
Jan-13
Jan-27
Feb-10
Feb-24
Mar-10
Mar-24
Apr-7
–2
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Dec-20
Jan-21
Feb-21
Mid-day Fixing (MAD/$) Min Band (MAD/$)
Max Band (MAD/$) Food Prices Non Food Prices CPI
Source: Bank Al.Maghrib and HCP.
Note: a fall in the nominal exchange rate as defined in this graph (Moroccan dirham to US$) implies an appreciation.
widening of the band from ±0.3 percent to ±2.5 percent (BAM) has recently announced that, for the time
in January 2018 and to ±5 percent in March 2020. being, its policy interest rate will remain unchanged
This move was put to the test during the COVID-19 at 1.5 percent, its historical low (both in nominal and
crisis. Like other emerging market currencies, during in real terms) after the two cuts adopted in 2020 (25
the weeks that followed the onset of the pandemic, basis points in March 2020 and 50 basis points in
the dirham depreciated against both the euro and June). Early in the crisis, BAM also expanded the
the US dollar, helping to absorb the external shock. scope of its refinancing operations, the scale of which
However, that trend was later reversed as markets increased by close to 60 percent between March
started differentiating country risks with the dirham and August. Since the end of last year, however, the
appreciating against the dollar and being relatively average size of BAM´s refinancing operations has
stable vis-à-vis the euro (Figure 8). The absence turned downwards, evidencing a decline in banks´
of exchange rate pressures, along with the above liquidity needs linked to a deceleration in the demand
mentioned strong and favorable access to international for cash (which, according to BAM’s latest projections,
capital markets, are signs of market confidence in the is only temporary) and to a drop in banks´ net foreign
resilience and prospects of the Moroccan economy. exchange position.
In the current context of weak economic So far, the banking system has weathered
activity, price pressures remain subdued. The the crisis relatively well. Short-term interbank rates
Consumer Price Index rose by just 0.3 percent (y-o-y) have declined to around 1.5 percent in line with
at the end of February 2021, driven by a fall in food recent policy rate cuts, and average lending rates
prices since December (Figure 8). Non-food inflation hovered around 4.3 percent in the fourth quarter of
has increased slightly, primarily because of the recent 2020 (down from 4.9 percent a year before). Together
evolution of energy prices, reaching 0.9 percent in with the various guarantees in place, this reduction
February. However, this level of inflation is still below in lending rates has helped sustain banking credit,
that of February 2020 (1.1 percent). Core inflation which has continued to expand in 2020, mostly in the
remains low and has not surpassed 0.5 percent in the form of liquidity loans. Bank deposits have also grown
last four months. since the start of the crisis, with a shift from term to
Monetary policy is accommodative, and the demand deposits, reflecting increased preference
central bank has increased its capacity to inject for liquidity. It is worth noting that the authorities
liquidity into the financial system. Bank Al Maghrib have recently enacted the reform of the CCG, which
Recent Economic Developments1 9has been transformed into a public limited company 2019 to 8.4 percent at the end of 2020, to which the
under the full supervision of the central bank: the largest banks have responded with a substantial
Société Nationale de Garantie et de Financement de increase in their provisioning levels. According to
l’Entreprise (SNGFE). This reform is aimed at ensuring stress tests carried out by the Central Bank, NPLs
greater independence and improved management. By could surpass 10 percent of credit in 2021.
placing all guarantees on the SNGFE balance sheet
rather than on the government´s balance sheet, this
change will incentivize risk-based decision making on
the part of the new entity regarding the issuance and 10
The reform assigns four layers of risk coverage for
management of guarantees.10 any losses generated from the guarantees: (a) annual
transfers from the Treasury, which will define/limit the
However, the COVID-19 pandemic is
amount of guarantees that can be provided by SNGFE;
causing a deterioration of the quality of bank´s (b) a security fund to be created by the SNGFE; (c) equity
credit portfolio. The ratio of non-performing loans capital of SNGFE; and (d), as a last resort, the state
(NPLs) has increased from 7.6 percent in December guarantee.
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