VZCZCXYZ0002
RR RUEHWEB

DE RUEHRB #1355/01 2401405
ZNR UUUUU ZZH
R 281405Z AUG 07
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 7261
INFO RUEHAS/AMEMBASSY ALGIERS 4506
RUEHTU/AMEMBASSY TUNIS 9370
RUEHCL/AMCONSUL CASABLANCA 3383
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS RABAT 001355 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN ECON ETRD MA
SUBJECT: MOROCCO ECONOMIC HIGHLIGHTS: AUGUST 
 
This message is Sensitive but Unclassified.  Not for internet 
distribution. 
 
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Article IV Consultations: Keep Up The Good Work 
--------------------------------------------- -- 
 
¶1. (SBU) In an information note released on August 9, the IMF 
outlined the positive conclusions of its 2007 Article IV 
consultations with Morocco.  The Board praised Morocco's 
"remarkable economic progress" over the course of recent 
years, noting that growth has accelerated, inflation has been 
contained, while foreign investment has increased rapidly. 
It urged Morocco to "consolidate and reinforce" this progress 
in years to come, judging that current policies are 
appropriate, but that the uptick in inflation in 2006 
warrants continued vigilance by the Bank Al-Maghrib.  The 
Board also praised Morocco's recent budget performance, but 
pressed for more ambitious targets, given the favorable 
economic climate.  The IMF also came down in favor of 
Morocco's gradual loosening of restrictions on capital 
account transfers, judging that the current exchange rate 
regime is "compatible with external stability." 
(Comment: The IMF's assessment is not a surprise, given the 
progress registered here on a variety of fronts.  Growth has 
averaged 5.4 percent a year since 2001, up from the average 
of 2 percent in the 1990s.  The economy remains susceptible 
to climactic variations, as is evident in the slippage of 
growth as a result of this year's drought, but whereas in 
previous years the disastrous harvest might have resulted in 
no growth or negative growth, this year it is still expected 
to reach 2 percent, given the strength of non-agricultural 
portions of the economy.  End Comment.) 
 
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Exports Up, But Still Lagging Imports 
------------------------------------- 
 
¶2. (U) Mid-year figures released this week by the Office des 
Changes show a pick up of exports in June, but their 
continued failure to match strong import growth.  Overall 
exports were up 4.8 percent through the end of June over the 
same period in 2006, after rising only 1.2 percent in the 
first five months of the year.  Imports grew 12.6 percent, 
however, leaving the trade deficit up 22 percent at 57.5 
billion Dhs.  The current account remained in surplus, 
however, with continued growth in tourism receipts, transfers 
from Moroccans resident abroad, and foreign investment. 
(Comment: As discussed in reftel, the competitivity of 
Moroccan exports remains a preoccupation here, as the 
coverage ratio of exports to imports continues to decline, 
and now hovers just above 50 percent.) 
 
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Tanger-Med Inaugurated 
---------------------- 
 
¶3. (SBU) The first stage of Morocco's flagship Tanger-Med 
port was inaugurated in the presence of King Mohammed VI and 
leading international shippers on July 29 with the arrival of 
the "Evelyne Maersk," one of the three largest container 
ships in the world.  The port will have a capacity of 8.5 
million containers per year when it is fully operational in 
¶2012.  (Comment: Tanger-Med is a key part of a coordinated 
policy reform and infrastructure program which aims to make 
Morocco a transhipment hub for the Western Mediterranean and 
Southern Europe.  Shippers present in Tangier, however, told 
the Ambassador that the port will face strong competition 
from new facilities in Algeciras, and that they intend to 
divide their operations between the two locations, to avoid 
local service interruptions and to keep competitive pressure 
on shipping rates.  End Comment.) 
 
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Moroccan Fisheries: Volume Down, But Value Up 
--------------------------------------------- 
 
¶4. (U) Morocco's Office National des Peche reported on July 
30 that while the tonnage of fish landed in Morocco declined 
by 2 percent in the first six months of the year over 2006, 
the value rose 8 percent.  The Cephalopod catch continued to 
be the mainstay of the industry, accounting for 30 percent of 
the catch's value, though it constituted only 6 percent of 
its volume.  Experts attribute the decline to a reduction in 
the coastal fleet in Laayoune, and note that artisanal 
catches have grown in value in Agadir, Laayoune and Tan Tan 
as they have been better commercialized.  Notable too is the 
contrast between the fisheries in the Mediterranean and the 
Atlantic: while the former declined by 12 percent in volume 
and 19 percent in value, the more important Atlantic catch 
(which represents nine tenths of national production) was 
stable and saw an 11 percent rise in value.  (Comment: 
Artisanal fisheries constitute an important part of the 
forthcoming MCC Compact, and will be further reinforced by 
the support it extends to more effective commercialization of 
that catch.  End Comment). 
 
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Delphi Extends Its Moroccan Operations 
-------------------------------------- 
 
¶5. (SBU) In a sign that our bilateral free trade agreement is 
now having an increasing impact on investment as well as 
trade, automotive parts giant Delphi Automotive Systems 
signed an investment agreement on August 1 that will expand 
its Tangier-based operations from 5,000 to over 8,000 
employees by 2009.  The 36 million USD investment will focus 
on electrical and electronic car components. 
 
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Auchan-ONA Divorce Finalized 
---------------------------- 
¶6. (SBU) The long-rumored divorce between French retail giant 
Auchan and the King's holding ONA was publicly confirmed in a 
terse press release on Friday, August 24.  The French 
conglomerate will sell its 49 percent stake in the company to 
ONA for an undisclosed, but reportedly healthy amount. 
Auchan will continue to honor its sourcing and assistance 
contracts, which run through 2008, but indicates that they 
will not be renewed.  The seven year partnership has been on 
the rocks since 2005, as an apparent result in differences 
between the two partners over how rapidly their Marjane and 
Acima retail outlets should expand into new markets.  Auchan 
requested arbitration in 2006, but lost the case, as a result 
of which ONA was able to take control of the boards of both 
Marjane and Acima. 
 
 
***************************************** 
Visit Embassy Rabat's Classified Website; 
http://www.state.sgov.gov/p/nea/rabat 
***************************************** 
 
RILEY