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PRESS/TPRB/23
12January 1996
MOROCCO CONTINUES LIBERALIZING ITSTRADE REGIME BUT THE
WTO RAISES CONCERNS INSOME SECTORS
Morocco ispursuing itsprocess ofeconomic andtrade reforms, launched in1983, although
themomentum ofchange hasdiffered between sectors. According toaWTO Secretariat report on
Morocco 'strade policies andpractices, recent developments include asignificant pushtoliberalize
certainservicesareas,inparticularbanking,andtoprivatizestate-ownedcompanies.Regulationslimiting
foreign holdings ofMoroccan companies havebeenabolished, exchange regulations andoperations
relating toforeign investment andborrowing havebeeneased, andjointventures withforeign companies
arenowbeing encouraged. Ofthe133state-owned companies scheduled tobesold, 32hadbeen
privatized byJune1995.
Thereport, which willbediscussed atareview ofMorocco bytheWTO 'sTrade Policy Review
Body on17and18January, notes thatsince agriculture andfarm-related activities playalarge role
inMorocco 'seconomy, short-term economic growth isstrongly influenced byclimatic conditions.
Morocco 'seconomy expanded rapidly in1994, withGDP growth exceeding 11percent. However,
severe drought caused theeconomy toshrink in1995.
After hosting theMarrakesh Ministerial Meeting inApril 1994, Morocco immediately ratified
theWTO Agreements tobecome afounding member oftheWorld Trade Organization. Under the
General Agreement onTrade inServices (GATS), Morocco bound access condition invarious services
categories, including professional services, other business services, value-added telecommunications
services, environmental services, andfinancial andtourism services. Morocco isanactive participant
inthenegotiating groups onmaritime transport services andbasic telecommunications.
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Within theWTO framework, Morocco undertook tobindalltariff lines. Likeother WTO
members, itisalsocommitted toconverting allquantitative measures affecting imports offarmproducts
totariffs. InJune1993, Morocco introduced tariff equivalents ofbetween 100and365percentfor
liveanimals, meat, dairy products andsome oftheirderivatives; other tariff equivalents aretobe
introduced in1996. Morocco hasnolegislation concerning GATT Article XIXoremergency safeguard
measures. While itsforeign trade regulations provide foranti-dumping andcountervailing measures,
these havenever beenused. Morocco iscurrently adapting itslawstoconform withtheprovisions
oftheWTO Agreement onTrade-Related Aspects ofIntellectual Property Rights.
InJuly1995, thesimple average tariffacross allitems was23.5percent.Thisaverage conceals
dutyescalation intheindustrial sector, especially inregard toproducts which compete withMoroccan
goods. According tothereport, highprotection forlocalproduction, including rawmaterials, tends
toaffectthecompetitivenessofdownstreamactivitiessuchastourism,andmoreadvancedmanufacturing
activities. Inturn,themotor vehicle sector benefits fromalocalcontent scheme, under which assembly
firms mustincorporate 60to70percentofMoroccan components orconduct compensatory exports.
Arecent contract withaEuropean producer foresees alocalcontent of50percentafterthree years.
Ontheexport side,Moroccan goods, especially those withahighleveloflocalprocessing,
arebeing promoted bymeans oftariff andtaxconcessions. Merchandise exports, states thereport,
comprise three main product groups: agricultural produce andseafood, textiles andclothing, and
phosphate andphosphate derivatives. These products account forsome 80percentofthecountry 's
merchandise export earnings. Morocco istheworld 'sleading phosphate supplier.
TheEuropeanUnionisMorocco'smaincommercialpartner.Itsuppliesoverhalfofthecountry's
merchandise imports, receives more than60percentofitsexports andoriginates three-quarters of
Morocco 'sinward foreign investment. Trade withJapan andtheUnited States isincreasing.
Thereport concludes thatMorocco 'seconomy stands togainfromitsrecent efforts todevelop
itsservices economy. With thedecline ofagricultural activities, services nowcontribute more than
50percentofthecountry 'sGDP. Thistrend islikely tocontinue, states thereport, especially since
thesector wastheonetobenefit most from recent trade liberalization andprivatization measures.
WiththeWTO Agreements inplace, Morocco hasanopportunity topursue andextend itsliberalization
policy andrevitalize itsadjustment process across theboard.
Notes toEditors:
TheWTO Secretariat 'sreport, together withareport prepared byMorocco, willbediscussed
bytheWTOTradePolicyReviewBody(TPRB)on17and18January1996.TheWTO'sTPRBconducts
acollective evaluation ofthefullrange oftradepolicies andpractices ofeachWTO member atregular
periodic intervals andmonitors significant trends anddevelopments which mayhaveanimpact onthe
global trading system.
Tworeports, together withareport oftheTPRB 'sdiscussion andoftheChairman 'ssumming
up,willbepublished induecourse asthecomplete Trade Policy Review ofMorocco andwillbe
available fromtheWTO Secretariat, Centre William Rappard, 154ruedeLausanne, 1211Geneva 21.
Thereports cover development ofallaspects ofMorocco 'strade policies, including domestic
lawsandregulations, theinstitutional framework, trade policies bymeasure andbysector. Since the
WTO cameintoforce, the"new areas" ofservices tradeandtrade-related aspects ofintellectual property
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rights arealsocovered. Attached arethesummary observations fromtheSecretariat andgovernment
reports. Fullreports willbeavailable forjournalists from theWTO Secretariat onrequest.
Since December 1989, thefollowing reports havebeencompleted: Argentina (1992), Australia
(1989 &1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon (1995),
Canada (1990, 1992&1994), Chile (1991), Colombia (1990), Costa Rica(1995), Côted'Ivoire (1995),
Egypt (1992), theEuropean Communities (1991, 1993&1995), Finland (1992), Ghana (1992), Hong
Kong (1990 &1994), Hungary (1991), Iceland (1994), India(1993), Indonesia (1991 and1994), Israel
(1994), Japan (1990, 1992and1995), Kenya (1993), Korea, Rep.of(1992), Macau (1994), Malaysia
(1993),Mexico(1993),Morocco(1989),NewZealand(1990),Nigeria(1991),Norway(1991),Pakistan
(1995), Peru(1994), thePhilippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore
(1992), Slovak Republic (1995), South Africa (1993), SriLanka (1995), Sweden (1990 &1994),
Switzerland (1991), Thailand (1991 &1995), Tunisia (1994), Turkey (1994), theUnited States (1989,
1992 &1994), Uganda (1995), Uruguay (1992) andZimbabwe (1994).
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TRADE POLICY REVIEW BODY
MOROCCO
Report bytheSecretariat -Summary Observations
Theeconomic environment
Confronted withinternal andexternal payment imbalances, in1983 Morocco embarked on
aseriesofeconomicadjustmentprogrammes.Themonetaryandbudgetarypolicyandtradeliberalization
measures adopted haveyielded significant results. Thegovernment deficit andinflation havebeen
contained andattheendof1994foreign exchange reserves represented about fivemonths ofexports.
Thedirham hasbeenmade convertible forcurrent transactions andforcapital transactions effected
bynon-residents. Thedirham hashelduprelatively wellagainst theprincipal foreign currencies.
Theexternal debtfellfrommore than100percentofGDP inthemid-eighties tolessthan70percent
in1994, butdebtservice isabsorbing almost onethirdofcurrent revenue inthebalance ofpayments.
Thecountry 'spresent problems include unemployment anddrought, which hasbeenafrequent
occurrence inMorocco fornearly 20years. Because ofitsseverity, thedrought of1995 isregarded
asthedrought ofthecentury andtheresulting poorharvests could chop4to6percentoffrealGDP.
These adverse climatic conditions haveaggravated theexodus fromruralareasandalsounemployment,
which hasnowreached about 16percentofthelabour force atnational level. Thesocial impact of
unemployment hasbeensoftened bytheexistence ofanextensive informal sector which, however,
ishaving anegative effect ongovernment revenue andhelping toincrease theburden ontax-paying
enterprises.
Transport costs (including freight costs forair,seaandroadtransport) arerelatively highas
compared withthose inother countries inasimilar economic situation. Moreover, thetaxes levied
donotreflect thelevelofbasic infrastructure (including electricity andtelecommunications) required
byindustry asgovernment revenue ismostly usedforpaying civilservice wages.
Withaviewtopromoting investment, especially foreign investment, thelawlimiting foreign
holdings inMoroccan companies, known asthe"Moroccanization" law, wasabolished in
September 1993, newbanking regulations wereadopted andaprivatization programme waslaunched.
Outofthe113State-owned companies andhotels scheduled forprivatization, 32hadalready been
privatized byJune1995 andtoday public investment isconcentrated inthesocial andinfrastructure
sectors. Foreign financing forjointventures withMoroccan partners isnowbeing encouraged; such
investment could alsohelptofinance thereplacement ofobsolete plant andequipment.
Morocco inworld trade
Morocco 'smerchandise exports comprise three main groups ofproducts which account for
about 80percentofthecountry 'smerchandise export earnings: agricultural produce andseafood,
textiles andclothing, andphosphate andphosphate derivatives. Morocco possesses more thanhalf
theworld 'sphosphate reserves and,internationally, istheleading phosphate exporter. Moreover, it
isphosphates thatenable Morocco tomaintain apresence inalarge number offoreign markets.
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Thestructure ofMorocco 'smerchandise imports haschanged inrecent years toreflect the
needs associated withtheinvestment encouraged byeconomic adjustment andgrowth. Theshares
offoodandenergy imports aredeclining whereas imports ofmachinery andothercapital goods, together
withimports ofrawmaterials needed bythechemical industry, areincreasing.
Theservices sector inMorocco ismainly based ontourism which isfavoured bythenatural
beauty ofthecountry anditscultural heritage. Tourist activities bring inasmuch foreign currency
asagricultural andseafood exports combined (about 30percentofmerchandise export earnings).
European tourists represent about 60percentofthetotal. Although considerable, tourist earnings
andtheremittances fromMoroccans working abroad arenotsufficient toabsorb thestructural deficits
ofthetrade balance.
TheEuropean Union continues tobeMorocco 'smain trading partner. Itsupplies about
54percentofmerchandise imports, receives 63percentofexports andevery yearisresponsible for
about 75percentofdirect foreign investment. Within theUnion, France, Spain, ItalyandGermany
havethelargest shares inthetrade withMorocco. Outside theEU,Morocco 'strade withJapan and
theUnited States isontheincrease.
Thefactors thathavefavoured trade withtheEUinclude bothMorocco 'slower labour costs
andthepreferential treatment granted tomany Moroccan products. However, some categories of
agricultural products aresubject totariff quotas andthecountry hasalsoagreed torestrict itsexports
oftrousers totheUnion. Morocco andtheEuropean Union intend toconclude anassociation agreement
which should eventually make itpossible toestablish afree-trade area.
Institutional andlegislative framework
TheKingdom ofMorocco isaconstitutional monarchy; theexecutive power isinthehands
oftheKing, asHead ofState, andhisGovernment. TheKingsigns andratifies international treaties.
Where trade isconcerned, billsaregenerally initiated bythecompetent Ministers andthensubmitted
totheChamber ofRepresentatives forapproval. TheChamber iscomposed of333Members, two
thirds ofwhom areelected directly byuniversal suffrage andonethirdbyanelectoral college.
Intheearly 1990s, theGovernment began revising theMoroccan legislation, parts ofwhich
dated fromthelastcentury. AdraftCompany Actandthree newCodes, oneforinvestment, onefor
trade andoneforlabour, havebeenprepared. AdraftCompetition Actisalsoinpreparation. All
these texts, which arebased ingeneral onthecorresponding French legislation, areintended toadapt
thelegislative framework tothevarious reforms which havebeencarried out,especially inthearea
oftrade. With theexception ofthedraftCompetition Act,these textsareintheprocess ofadoption.
Theconstitutional reforms of1993 were concerned, among other things, withreducing the
timerequired fortheadoption orratification andimplementation oflawsinMorocco. However, there
arestillmany billswhich havebeensigned butnotratified orratified butnotyetimplemented.
Features ofeconomic policy
International commitments
Morocco acceded totheGATT in1987. Itparticipated actively intheUruguay Round
negotiations andhosted theMarrakesh Summit inApril 1994. Ithasaccepted theWTO Agreements
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andhastherefore committed itself topursue theliberalization ofitsexternal trade inamultilateral
context.
Within theframework oftheWTO, Morocco hascompleted thebinding ofallitstariff lines.
Thecountry hasalsobound itsfiscal import levyand,likeothermembers oftheWTO, ithasundertaken
thetariffication ofthequantitative measures which affect agricultural products. InJune1993, Morocco
introduced tariff equivalents ofbetween 100and365percentforliveanimals, meat, dairy products
andsome oftheirderivatives. Other tariff equivalents aretobeintroduced in1996. Forsome meat
categories theceiling ratesreach 380percent.
Subject tolimitations concerning thephysical presence offoreigners, Morocco hasentered
intocommitments under theGeneral Agreement onTrade inServices. Ithasbound theconditions
ofmarket access forcertain categories ofservices,in particular professional services, other business
services, value-added telecommunications services, environmental services, andfinancial andtourism
services. Morocco isparticipating actively inthework ofthemaritime transport services andbasic
telecommunications negotiating groups. Abilliscurrently being prepared withaviewtoadapting
thelegislation inforcetotheprovisions oftheWTO Agreement onTrade-Related Aspects ofIntellectual
Property Rights.
Within theArabMaghreb Union (AMU), ofwhich Morocco isamember, Tunisia andAlgeria
arethetwomostimportant destinations forMoroccan products. Exports tothese markets areexempt
fromimport duties (inthecaseofTunisia forcertain products) orpayacountervailing taxof17percent
rather thanahigher rate.Thevolume oftradewithin theUnion isstilllimited buttheMember countries
areplanning toestablish afree-trade area. Morocco isamember of,interalia,theOrganization of
theIslamic Conference andhasconcluded bilateral trade andtariff agreements withseveral Arab and
Sub-Saharan African countries.
Trade policy instruments andtheir effects
Morocco 'scurrent tradepolicy combines progressive import liberalization withthepromotion
ofindustrial exports andheavy protection forcertain agricultural staples. Ontheimport side,domestic
production isprotected byanumber ofmeasures suchasthelicences required forafewproducts
(10.2 percentoftotalmerchandise imports in1994 asagainst 8.4percentin1993), import duties,
thefiscal import levyandaparafiscal tax. Subsidies havebeengranted inorder toencourage the
consumption ofcertain locally-produced agricultural products.
By1993, Morocco hadconsiderably simplified itsimport tariff byreducing thenumber and
themaximum levelofdutyrates; themaximum rateshadgenerally beenreduced to35percent,except
forcertain products which weresubject todutyat40or45percent. Since then, themaximum rates
havebeenraised, more particularly asaresult oftheintroduction ofcertain tariff equivalents. Atthe
endofthefirsthalfof1995 thesimple average dutyratewas23.5percent. Thisaverage conceals
aprogressivity ofduties intheindustrial sector, especially asregards products which havebeenor
could bemanufactured inMorocco.
Theagricultural sector, whose importance resides notonlyintheproportion ofthepopulation
thatitemploys butalsointhefoodsecurity policy nowinplace, isthesector thatreceives themost
protection: cereals, inparticular softwheat, andoilseed, sugar, milkandmeataretheproducts more
especially concerned. TheForeign Trade Actprovides forvariable levies onimports ofcertain staple
foods. Farmers areexempt from taxation.
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Ontheexport side,Moroccan goods, especially those withahighleveloflocalprocessing,
arebeing promoted bymeans oftariff andtaxconcessions. These concessions include relief and
exemption fromorreduction ofduties andlevies, especially onimported inputs, andconcessions with
respect tothetaxonexporters 'profits. Goods forexport areexempt from value-added tax.There
isprovision forrefunds onexports ofcertain agricultural products insurplus onlocalmarkets, but
sofarthereappears tohavebeennoinstances ofthismeasure being applied. Industrial zones, inwhich
State aidisavailable forthepurchase ofland, andafreezonearecurrently operational. Except for
hydrocarbons andcertain services, duties andtaxes onexports havebeenprogressively abolished;
thetaxes levied onagricultural andmining exports were abolished bythe1995 Finance Act.
Theinstrumentsdesignedtoprotectlocalindustrycouldmakeexportingenterpriseslessefficient.
Theprinciple istogivefavourable treatment onlytogoods, inparticular inputs, which arenotorcannot
belocally produced. Atthesame time, rawmaterials ofMoroccan origin arerelatively expensive.
Infact,sheltered from foreign competition andbenefiting from subsidies, thelocal producers have
littleincentive toreduce theircosts. Moreover, although theimporting countries havenotsofartaken
anycountervailing measures against Moroccan exports, theconcessions granted could increase the
riskoftheirdoing so.These regimes alsohaveaprejudicial effect onexports ofcertain services,
including tourism, which mainly uselocally-produced inputs.
Morocco hasnolegislation concerning theemergency measures described inArticle XIXof
theGATT. However, theforeign trade regulations currently inforce provide foranti-dumping and
countervailing measures which, itseems, havenever yetbeenapplied. Asaprecaution, pending the
entry intoforce ofanewlawintended, among other things, toadapt these measures totheWTO
Agreements, apreliminary import declaration wasintroduced inApril 1994. Bananas aretheonly
import forwhich thisdeclaration isrequired.
Sectoral aspects oftrade policy
Agriculture provides work forabout 40percentoftheMoroccan labour force. However,
thecontribution ofthesector toGDP hasfallen from nearly 20percentinthemid-80s tolessthan
15percentonaverage since1990. During thelast10years drought hasbecome anincreasingly regular
feature oftheclimate and,accordingly, isnowafactor which mustbetaken intoconsideration inmaking
forecasts. Thus, theGovernment hasreoriented itsagricultural policy away from thebroader goal
ofself-sufficiency towards thenarrower objective ofguaranteed foodsecurity. Theprogressive
liberalization ofthissector could befacilitated bythecommitments entered intobyMorocco inthe
context oftheWTO Agreements andthedevelopment ofmore efficient modern production unitsusing
irrigation systems. Atpresent, suchunits arefarming about 11percentofthecultivated areaand
account foraquarter ofagricultural production and80percentofthecountry 'sagricultural exports.
Themotor vehicle sector hasbeenexperiencing difficulties forseveral years. Accordingly,
theGovernment hasundertaken torevitalize thelocalcontent system introduced in1982, according
towhich motor vehicle assembly firms mustincorporate, intheirproduction, 60to70percentofparts
ofMoroccan origin oroffset byexports. Acontract recently signed withaEuropean manufacturer
callsforalocalcontent of50percentafterthefirstthree years; thecontract alsoprovides forcertain
taxconcessions.
Theservices sector contributes more than50percenttotheformation ofMoroccan GDP.
Theincrease initsshare isattributable tothedecline inthatofagricultural activities during recent
years. Atthesame time, thesector hasespecially benefitted from thedynamism generated bythe
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country 'sachievements intheareaofliberalization. Infact,thisisthesector inwhich thedisengagement
oftheState hasbeenmost pronounced interms ofthenumber ofenterprises privatized.
Theliberalization ofthebanking subsector hasfacilitated theentire opening-up process currently
under wayinMorocco. Theliberalization oftheother branches oftheservices sector, suchas
telecommunicationsandinsurance,islessadvancedbut,giventhecommitmentsenteredintobyMorocco
inthecontext oftheWTO Agreement onTrade inServices, there areplans forcertain activities to
beopened up.
Trade policies andforeign trading partners
Asinthecaseofother countries, theliberalization programme carried outunilaterally by
Morocco overaperiod ofmorethan10years wasmade necessary byeconomic difficulties. Asindicated
inthefirstreview ofMorocco 'strade policy in1989, thethrust ofthepolicy pursued hasbeento
promote exports ofmanufactures. Thefavourable results obtained insuchareas aseconomic growth,
inflation, government finance andexternal trade ingoods andservices should haveencouraged the
country tocontinue withthereforms. However, internal resistance andadministrative andlegislative
delays seem tohaveblunted theinitial enthusiasm.
Morocco 'sactive participation intheUruguay Round negotiations andthecommitments ithas
entered intointhisconnection reaffirm itsattachment tothemultilateral trading system. TheWTO
Agreements offeritanopportunity topursue andextend itsliberalization policy andtoeliminate the
distortions inherent inthepreferential regimes currently inplace. Thus, theconditions arenow
favourable forMorocco totakeupthechallenge ofthedrought andrevitalize itsadjustment process.
TRADE POLICY REVIEW BODY
MOROCCO
Report bytheGovernment -Summary Extracts
Introduction: Economic Environment andPolicy
Profound changes tookplace intheoverall economic environment inwhich Moroccan
trade policy developed during theperiod 1990-1994.
During thisperiod Morocco pursued apolicy ofeconomic reorganization andrestructuring
thatfocused inparticular onmodernization andliberalization oftheeconomy, greater openness to
theexterior, andstrengthening andconsolidation ofthemacroeconomic framework.
Thepolicies implemented inthiscontext were aimed especially atstrengthening market
forces andeliminating distortions andbottlenecks, soastoachieve amore efficient allocation of
resources among thevarious economic sectors while atthesame timecreating favourable
conditions forthedevelopment oftheprivate sector 'sroleineconomic activity.
Thisprocess ofeconomic reorganization andreform, launched in1983, waspursued
during theperiod 1990-1994.
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Thus, along withthediscontinuation ofdebtrescheduling, theintroduction ofdirham
convertibility forcurrent transactions andthelaunching oftheprivatization programme, themain
areas inwhich reforms were pursued anddeepened were:
Implementation ofathorough overhaul ofthefinancial sector withaviewtoliberalizing,
modernizing andstimulating thebanking system andcapital andmoney markets. Thisreform was
begun in1991 andisnowbeing completed;
Further liberalization offoreign trade, inparticular bycutting themaximum tariff rates
from 45percentto40percentin1992 andto35percentin1993 andreducing thenumber of
tariff ratesfrom 15to12,aswellasthrough theadoption oftheForeign Trade Act,which
provides amodem, liberal legalframework thatincludes anti-dumping andcountervailing
mechanisms similar tothose usually found attheinternational level;
Further liberalization oftheexchange regulations, going beyond thesphere ofcurrent
transactions. Thisliberalization concerned inparticular alloperations relating toforeign
investment andforeign borrowing byeconomic operators soastoenable them totapinternational
markets directly tofinance theirimports andinvestments; inaddition, exporters andMoroccan
residents abroad were authorized toopenforeign currency accounts inthe
Moroccan banking system.
Liberalization oftheeconomy andconsolidation ofitsopenness totheoutside world are
thebedrock principles ofMorocco 'seconomic policy. These principles havebeenmore firmly
anchored inthecountry 'soverall economic, commercial andfinancial structures since 1983, with
theimplementation ofthestructural adjustment process.
Hence, thereforms already carried outorstillunder wayareaimed atthemore thorough
liberalization oftheeconomy andatintegrating itmore firmly intotheworld economy.
Privatization isanintegral partofthisprocess. Itsobjectives include expanding thescope
ofprivate sector activity, encouraging foreign investment, modernizing theproduction sectors and
improving themobilization ofprivate saving forproductive purposes. Accordingly, the
privatization programme covering 113public enterprises could beextended toinclude some
additional ones. Furthermore, inlinewithprivatization, thescope ofprivate sector activity will
befurther expanded through theelimination ofpublic sector monopolies foranumber ofpublic
services suchasenergy generation, telecommunication services andsoforth. Finally, theprivate
sector willalsohavearoletoplayininfrastructure projects thatwere hitherto exclusively
reserved tothepublic sector, inparticular roads, industrial zones, etc.
Meanwhile, asitsroleineconomic activity dwindles theState willbecome more ofa
partner fortheprivate sector ineconomic development, rather thantheengine ofgrowth which it
hasbeenforsolong.
Inthiscontext, acommittee chaired bythePrime Minister hasbeensetuptooversee the
development oftheprivate sector. Itsmembers aregovernment andprivate sector representatives,
anditspurpose istomake proposals totheGovernment onmeasures orstrategies which would
contribute tothecountry 'seconomic development andtothestrengthening ofprivate sector
activity.
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Inaddition, national legislation oninvestment, trade andlabour iscurrently being
overhauled. Thenewbasic lawoninvestment isdesigned toincorporate investment incentives
intoordinary lawandsimplify administrative procedures.
Consequently, theroleofgovernment willfocus more onregulating theeconomy and
maintaining aviable, stable andfavourable framework forinvestors andsavers, since astable
macroeconomic framework isthebestmeans forachieving thefurther liberalization ofthe
economy anditsintegration intotheworld economy.
With regard toeconomic trends inMorocco during theperiod 1990-1994, average annual
growth overthisperiod wasintheorder of3.2percent. Thisaverage rateconceals erratic
variations largely reflecting theimpact ofexogenous -andfrequently adverse -factors onthe
Moroccan economy.
Thisperiod wasmarked bytwosuccessive years ofsevere drought which hadaserious
impact onagricultural production, withtheresult thatGDP declined inrealterms by4.1percent
in1992 and1.1percentin1993. Itwasalsomarked bythenegative effects oftheGulfcrisis
andtheuncertainties preceding theconclusion oftheUruguay Round negotiations ontheworld
economy andtrade, which ledtothestrengthening ofregional groupings andtheresurgence of
protectionism.
Finally, thisperiod wasmarked bytheadverse effects ofturmoil ininternational currency
markets, inparticular in1992 and1993 andattheendof1994. Despite these unfavourable
circumstances, Morocco made significant progress inconsolidating itsmacroeconomic framework,
improving theinvestment environment andstrengthening economic liberalization.
Morocco putanendtosuccessive rounds ofrescheduling andresumed normal repayment
ofitsforeign debtasfrom 1January 1993. Italsoestablished convertibility ofthedirham for
current transactions inJanuary 1993, andlaunched theprivatization programme, likewise in1993.
Asfarasthemacroeconomic situation andoutlook areconcerned, itisworth noting that
afteraperiod ofnegative growth of4.1percentand1.1percentin1992 and1993, respectively,
in1994 GDP expanded sharply, byabout 11.5percent. With theexception ofthebuilding and
public works sector, allbranches ofactivity contributed tothisgrowth, although toavarying
extent. Theagricultural sector alone expanded by63percent, accounting forsome three quarters
oftotalGDP growth. Output ofthesecondary andtertiary sectors roseby4.3percentand2.6
percent, respectively.
Incontrast withthetwoprevious years which hadbeenmarked bydrought, in1994 the
agricultural sector enjoyed favourable weather conditions, which ledtoanextension ofthearea
under cultivation andasharp improvement inyields, particularly ofcereals. There wasalsoan
improvement inthelivestock sector, thanks toabundant fodder crops, which ledtoherd
restocking. Finally, fisheries production reached thelevelof750,000 tonnes, anincrease of
almost 20percent, attributable exclusively tocoastal fishing.
After a1.3percentdropin1993, thevalue added ofsecondary activities roseby4.3per
centin1994, thanks inparticular tothephosphates sector. Output ofthe"energy andwater"
sector increased by8percentasaresult ofariseinelectricity generation, essentially from
thermal power stations, asaresult oftheexpansion ofinstalled capacity. Theindustrial sector
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recorded growth of4.2percent, towhich allindustries contributed, inparticular theagro-
industry andchemical andparachemical industries.
Lastly, inparallel withthegrowth inother activities traded services roseby2.6percent,
asaresult ofincreases of9.2percent, 5.3percentand1.9percentintrade, transport and
communications, andother services, respectively.
Allinall,taking intoaccount a2.7percentriseinthedeflator, gross domestic product
growth was14.5percentincurrent terms asopposed to2.5percentin1993.
Final consumption roseby16percent, compared with2.8percentin1993 and1.3per
centin1992, primarily asaresult ofthe18percentjump inhousehold consumption, which had
remained virtually flatoverthetwoprevious years. Thissurge waslinked withtherisein
agricultural output andthereserves builtupinrural areas.
Investment expenditure roseby7.7percentin1994. However, thiswaslargely
accounted forbyinventory replenishment ofsome 2.3billion dirhams, essentially inenergy and
industrial products. Gross Fixed Capital Formation (GFCF) increased slightly, by2.6percent,
sothatitslevelinrelation tocurrent GDP gives aninvestment rateof20percentcompared with
anaverage of22.5percentoverthefourprevious years.
Foreign trade
Moroccan foreign trade grew by7percentin1994 over1993, withincreases inboth
imports (6.6percent) andexports (7.7percent). Theriseinimports isaccounted forprimarily
bypurchases ofsemi-finished products, energy products andsome primary commodities andraw
materials suchaswood, cotton andoilseeds. Ontheother hand, totalimports offoodstuffs fell
considerably asaresult oftheexceptional harvest in1994.
Export growth wasaccounted forprimarily byphosphates andphosphate products, which
represented slightly overaquarter oftotalexports, aswellasfoodproducts, which accounted for
nearly 28percent.
Nosignificant changes havetaken place inthegeographical distribution ofMorocco 's
foreign trade overthelastfouryears. TheEuropean Union continues totakethelion'sshare of
bothimports (54percent) andexports (63percent). Within thisgrouping, Morocco 'smain
suppliers andclients areFrance, Spain, ItalyandGermany. Thebalance-of-payments current
account deficit should bearound 2.2percentofGDP in1994 (much thesame asin1993), and
wasentirely covered bytheinflow offoreign investment. Asaconsequence, foreign currency
reserves could beconsolidated atalevelcovering more thansixmonths ofimports ofgoods and
services.
External debt
Foreign debtindicators haveimproved sharply inrecent years. Theprincipal represented
theequivalent of68percentofGDP in1994 asopposed toover80percentin1993 andover
100percentinthemid-1980s. Thedebtservice ratioalsoimproved significantly. Nevertheless,
debtservice remains aheavy burden, stillaccounting formore thanathirdoftotalcurrent
receipts inthebalance ofpayments.
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Prices andinterest rates
Consumer prices continued torisein1994 atthesame rateasin1993 and1992, i.e.5per
cent, thusconfirming thatinflation hasbeenbrought under control, which isoneofthemain goals
ofthecountry 'seconomic policy. Lending interest rates, which havebeenprogressively
liberalized since 1991 aspartoftheoverall reform ofthefinancial sector, currently stand atabout
11.5percent, which represents a4point falloverthree years. Thisfallhasoccurred inlinewith
thecurbing ofinflation, which hashelped toimprove investment financing conditions.
Public finances
Despite theadverse impact oftheeconomic recession in1992 and1993 onthelevelof
budgetary receipts, theTreasury deficit didnotexceed theequivalent of3percentofGDP in
1994 compared with2.4percentofGDP in1993.
Asaconsequence ofthisslight increase inthedeficit, combined withanegative netflow
ofexternal financing, theGovernment hastohavegreater recourse todomestic financing, butas
thisprimarily concerned non-bank resources andinsofarasthere wassurplus liquidity inthe
banking system, itdidnotcreate anyserious pressure onthemoney supply.
END