VZCZCXRO9225
RR RUEHLMC
DE RUEHRB #0490/01 0791410
ZNR UUUUU ZZH
R 201410Z MAR 06 ZDK
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 3125
INFO RUEHCL/AMCONSUL CASABLANCA 1406
RUEHAS/AMEMBASSY ALGIERS 3818
RUEHTU/AMEMBASSY TUNIS 8698
RUEHNK/AMEMBASSY NOUAKCHOTT 3043
RUEHFR/AMEMBASSY PARIS 4068
RUEHRO/AMEMBASSY ROME 1436
RUEHMD/AMEMBASSY MADRID 5396
RUEHLO/AMEMBASSY LONDON 2830
RUEATRS/DEPTTREAS WASHDC
RUCPDOC/USDOC WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEHRC/USDA FAS WASHDC 0865
RUEAORC/USCBP WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEAEPA/HQ EPA WASHINGTON DC

UNCLAS SECTION 01 OF 02 RABAT 000490 
 
SIPDIS 
 
C O R R E C T E D COPY (ADDED CAPTION AND SIGNATURE) 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR NEA/MAG, NEA/OFI AND INL/AAE 
DEPT ALSO FOR EB/TPP, EB/IFD AND DRL/IL 
STATE PASS USTR FOR DOUG BELL 
STATE PASS USAID FOR JENNIFER RAGLAND 
USDOC ITA/MAC/ANESA FOR DAVID ROTH 
USDOC FOR FSC/OIO AND CLDP 
USDOL FOR ILAB 
PARIS FOR ZEYA 
LONDON FOR TSOU 
ROME FOR ROSE 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ELAB ECPS MO
SUBJECT: MOROCCO ECONOMIC HIGHLIGHTS 
 
RABAT 00000490  001.3 OF 002 
 
 
This message is Sensitive but Unclassified.  Please treat 
accordingly. 
 
-------------------------- 
Exchange Rate on the Move? 
-------------------------- 
 
¶1. (U) Central bank governor Abdellatif Jouahri said March 
14 that Morocco plans to move "in the medium-term" towards a 
more flexible exchange rate system.  Jouahri said the 
country's increasing openness to trade warrants a transition 
to an as-yet-unspecified exchange regime, a move the IMF has 
consistently recommended.  The Dirham is currently loosely 
pegged to a basket of currencies strongly weighted toward 
the Euro.  Jouahri said to do this the country will work to 
strengthen its monetary policy and its banking system.  He 
also said the kingdom will be ready in 2007 to meet banking 
transparency requirements under the Basel II agreement 
concluded in 2004. 
 
------------------------- 
FTA Attracting Investment 
------------------------- 
 
¶2. (SBU) Econ contacts in the Prime Minister's office have 
confirmed that Italian textile manufacturer Legler will soon 
announce an investment of more than $65 million to establish 
manufacturing operations in Morocco.  The move will create 
800 jobs and is part of Legler's strategy to access the 
American market using the newly-implemented U.S.-Morocco 
Free Trade Agreement.  Industry contacts say they have heard 
rumors of forthcoming investment in Morocco (and in some 
cases reinvestment) by several prominent retailers including 
Gap, JC Penny, Levis and Nike.  These investments would be, 
in many cases, directly related to FTA implementation. 
 
------------------- 
Yes, We Have No Gas 
------------------- 
 
¶3. (U) Gas stations were closed nationwide on March 13 as 
the Federation of Fuel Traders (FNCCM) staged a one-day 
strike to protest a new increase in fuel prices and new 
taxes on oil products.  The latest price hike was the third 
since July 2005.  The FNCCM also protested a seven percent 
rise in VAT on fuel sold by service-stations, a measure 
aimed at reducing a $1.5 billion deficit in state subsidies. 
 
--------------------- 
Funding Entrepreneurs 
--------------------- 
 
¶4. (U) The International Finance Corporation (IFC) and the 
Foundation for Local Development and Partnership (Fondep), a 
Moroccan microfinance institution, signed an agreement to 
provide Fondep with credit to expand its microfinance 
lending activities.  Created in 1996, Fondep offers loans 
and counsel to entrepreneurs normally excluded from 
traditional bank lending, such as rural women and young 
people.  IFC's partial credit guarantees will allow Fondep 
to obtain financing of up to $6 million at favorable rates. 
The agreement marks IFC's first structured finance 
transaction in Morocco. 
 
 
 
 
 
----------------- 
Mortgages for All 
----------------- 
 
¶5. (U) In an encouraging sign for a moribund banking sector, 
Attijariwafa bank, the largest bank in Morocco and the 
eighth largest in Africa, is expanding its position in the 
home mortgage market.  Although traditionally, Moroccan 
banks have shied away from mortgage lending and small 
business loans in favor of large collateralized loans to 
known customers, Attijariwafa will introduce three new 
products targeting professionals, students and low income 
earners.  The new products have been publicized through an 
aggressive (albeit humorous) advertising campaign.  The 
Moroccan mortgage market has grown considerably over the 
past five years, with 2005 mortgages reaching almost $7 
million, up from less than $4 million in 2000. 
 
------------------------ 
World Bank Supports INDH 
------------------------ 
 
¶6. (U) The World Bank announced March 14 that it will 
provide substantial funding in support of the GOM's Human 
Development Initiative (INDH), the King's signature economic 
and social development program.  The announcement was made 
after a meeting between World Bank president Paul Wolfowitz 
and Prime Minister Driss Jettou.  During the same visit, 
Jettou also met with IMF deputy managing director Takatoshi 
Kato and with Millennium Challenge Corporation (MCC) CEO 
John Danilovich.  The GOM is also seeking substantial 
funding for the INDH from MCC and other members of the donor 
community. 
 
------------------- 
Not Just Casablanca 
------------------- 
 
¶7. (U) American actor/director Irwin Winkler has begun 
shooting his latest film "Home of the Braves" in the 
southern Moroccan city of Ouarzazate.  The film, which 
features American rapper 50 Cent and Samuel L. Jackson, will 
also be shot in Spokane, Washington. 
Riley 
 
RABAT 00000490  002.2 OF 002 
 
 
----------------- 
Mortgages for All 
----------------- 
 
¶5. (U) In an encouraging sign for a moribund banking sector, 
Attijariwafa bank, the largest bank in Morocco and the 
eighth largest in Africa, is expanding its position in the 
home mortgage market.  Although traditionally, Moroccan 
banks have shied away from mortgage lending and small 
business loans in favor of large collateralized loans to 
known customers, Attijariwafa will introduce three new 
products targeting professionals, students and low income 
earners.  The new products have been publicized through an 
aggressive (albeit humorous) advertising campaign.  The 
Moroccan mortgage market has grown considerably over the 
past five years, with 2005 mortgages reaching almost $7 
million, up from less than $4 million in 2000. 
 
------------------------ 
World Bank Supports INDH 
------------------------ 
 
¶6. (U) The World Bank announced March 14 that it will 
provide substantial funding in support of the GOM's Human 
Development Initiative (INDH), the King's signature economic 
and social development program.  The announcement was made 
after a meeting between World Bank president Paul Wolfowitz 
and Prime Minister Driss Jettou.  During the same visit, 
Jettou also met with IMF deputy managing director Takatoshi 
Kato and with Millennium Challenge Corporation (MCC) CEO 
John Danilovich.  The GOM is also seeking substantial 
funding for the INDH from MCC and other members of the donor 
community. 
 
------------------- 
Not Just Casablanca 
------------------- 
 
¶7. (U) American actor/director Irwin Winkler has begun 
shooting his latest film "Home of the Braves" in the 
southern Moroccan city of Ouarzazate.  The film, which 
features American rapper 50 Cent and Samuel L. Jackson, will 
also be shot in Spokane, Washington.