Front Matter

Front Matter Page

IMF Country Report No. 16/330



October 2016

This paper on Morocco was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on September 2016.

Copies of this report are available to the public from

International Monetary Fund • Publication Services

PO Box 92780 • Washington, D.C. 20090

Telephone: (202) 623-7430 • Fax: (202) 623-7201

E-mail: Web:

Price: $18.00 per printed copy

International Monetary Fund

Washington, D.C.

© 2016 International Monetary Fund

Front Matter Page





September 2016

Prepared By

Pilar Garcia Martinez, Sanaa Nadeem, and Onenne Partsch

Monetary and Capital Markets Department

This Technical Note was prepared by IMF staff in the context of the Financial Sector Assessment Program in Morocco. It contains technical analysis and detailed information underpinning the FSAP’s findings and recommendations. Further information on the FSAP can be found at





  • A. Main Features

  • B. International Best Practices

  • C. CCSRS as Macroprudential Authority

  • D. Recommendations

  • E. Going Forward





  • A. Broad-based Tools

  • B. Targeted Tools

  • C. Housing

  • D. Systemically Important Banks and Cross-Border Expansion

  • E. Liquidity

  • F. Nonfinancial Institutions

  • References


  • 1. Coordinating MaPP with Other Policies

  • 2. Operationalizing the Macroprudential Framework

  • 3. BAM Risk Mapping System

  • 4. Financial Stability Map

  • 5. Real Estate Price Index, by Category

  • 6. Indicators of Market Liquidity

  • 7. Selecting Macroprudential Instruments


  • 1. Table of Recommendations


  • I. Risk Mapping Framework: Existing Indicators and Recommendations

Executive Summary1

Macroprudential policies (MaPP) can play an important role in mitigating financial stability risks in Morocco. MaPP aims to increase the overall resilience of the financial system, contain the buildup of systemic risks over time, and address vulnerabilities stemming from structural relationships between financial intermediaries (IMF 2013). For Morocco, limited fiscal and external policy buffers, high vulnerability to external shocks due to dependencies on oil imports and trade with Europe, and the expanding size and complexity of a bank-dominated financial sector underscore the importance of an effective MaPP framework.

The current institutional framework is sound, but could be further strengthened. The current institutional setup comprising the Systemic Risk Surveillance and Coordination Committee (CCSRS) provides a good framework, but remaining gaps can undermine its ability and willingness to act. The framework could be strengthened to ensure effective MaPP implementation by: (i) clearly setting out the powers entrusted to the CCSRS in fulfilling its MaPP mandate and the decision-making process, preferably a majority rule with a power of veto right to BAM; (ii) the laws governing other financial regulators need to include financial stability in their domain; and (iii) the CCSRS should be made accountable through the disclosure of its policy decisions and through regular appearances in front of the parliament.

Complementarities and externalities between policies make clear the need for the central bank to play a key role in the MaPP framework, while ensuring its independence and credibility are not jeopardized. At the current juncture, with monetary policy constrained and fiscal policy overextended, there may be an important role for MaPP to manage financial stability risks and address specific externalities. However, on occasion, MaPP may come in conflict with microprudential or monetary policy. With interagency coordination committees in place, Morocco is well-placed to navigate potential conflicts among different policy objectives.

Effective MaPP relies on the capacity to comprehensively assess potential systemic risks. This provides a cogent basis for the selection and calibration of macroprudential tools. Systemic risks should be monitored through a risk mapping framework comprising multiple indicators of relevant, material risk from statistical and supervisory bodies, both in the time (cyclical) and cross-sectional (structural) dimensions, and be updated periodically (IMF 2013).

Bank Al-Maghrib has recently taken important steps to advance financial stability analysis and develop a macroprudential policy framework. A risk mapping framework has been put in place, a Financial Stability Report is now produced, and stress testing has been fine-tuned. The groundwork is being laid to develop the Basel III countercyclical capital buffer regime, leverage ratio, and capital surcharge for systemically important banks, as well as LTV/DTI ratios.

Whereas the risk mapping framework now plays an integral role in monitoring systemic risks and producing assessments, their frequency could be increased and coverage further extended in the nonfinancial sector. Periodic internal surveillance should take place on at least a quarterly basis in view of an evolving macrofinancial climate. Increased data coverage for nonfinancial institutions, particularly households, SMEs, insurance, and pensions, would improve the scope of surveillance, particularly in light of their interconnectedness and the possibility of policy leakages from more supervised sectors. Risk mapping indicators and selection of macroprudential tools should also remain forward-looking and flexible to respond to emerging systemic risks.

Near-term implementation of the Basel III countercyclical capital buffer (CCB) should be a priority. Preparatory work is underway to introduce the CCB (with the leverage ratio), but the existing roadmap for its implementation should be accelerated. The current macroeconomic environment provides an opportune juncture to implement the CCB, ensuring that system-wide capital buffers can be accumulated in an upturn. The CCB could be complemented by other broad-based tools such as dynamic provisioning requirements (DPRs) to enhance existing bank provisioning for risky loans.

Broad-based tools could be further complemented by targeted sectoral tools that more closely address the sources of systemic risk. In addition to the planned implementation of LTV/DTI and capital surcharges for systemic banks, the toolkit could include targeted risk weights and exposure caps for riskier sectors such as real estate development. To address chronic liquidity shortages in times of financial distress, differentiated liquidity charges for SIBs that build on the existing prudential liquidity coverage ratio (LCR) could be considered.

Table 1.

Table of Recommendations

article image
Morocco: Technical Note-Macroprudential Policy: Institutional Arrangements and Instruments
Author: International Monetary Fund. Independent Evaluation Office