This 2007 Article IV Consultation highlights that macroeconomic conditions of Morocco remain strong. Average growth has reached 5.4 percent per year since 2001, 3.4 percentage points higher than in the 1990s, reflecting the ongoing diversification of the nonagricultural sector and its increased resilience to shocks. As a result, real per-capita income is on the rise and the unemployment rate has started to decline. The current account is expected to record its seventh consecutive surplus in 2007, thanks to strong remittances and tourism receipts. The public finance situation has also strengthened.
1. This statement provides additional information that has become available since the circulation of the staff report. It does not change the thrust of the staff appraisal.
2. Recent data confirms the slowdown in inflation. Year-on-year consumer-price inflation stood at 1.9 percent at end-June 2007, down from 3.3 percent at of end-December 2006, reflecting mostly the deceleration in the prices of transportation and communications services.
3. In June, Morocco issued ten-year Eurobonds in an amount of €500 million, the first such issuance since 2003. The bonds were issued with a 55 basis point spread, and were more than 3 times oversubscribed. The authorities used the proceeds to repay their outstanding London Club debt ahead of schedule.
4. On July 18, the Minister of Finance announced a package of capital account liberalization measures, in line with staff recommendations. Measures include: (a) a reduction in the surrender requirement on export proceeds; (b) the partial liberalization of trade-related credit and payments; (c) the broadening of the range of transactions that can be covered by currency hedging instruments, and the extension of the maximum maturity allowed; and (d) the partial liberalization of outward portfolio investment by banks, insurance companies and mutual funds, as well as foreign direct investment by firms.