VZCZCXYZ0000
RR RUEHWEB

DE RUEHRB #0032/01 0131217
ZNR UUUUU ZZH
R 131217Z JAN 09
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 9531
INFO RUEHAS/AMEMBASSY ALGIERS 4948
RUEHEG/AMEMBASSY CAIRO 2481
RUEHMD/AMEMBASSY MADRID 6079
RUEHTU/AMEMBASSY TUNIS 9762
RUEHCL/AMCONSUL CASABLANCA 4451

UNCLAS RABAT 000032 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EAGR EFIN MO
SUBJECT: MOROCCO ECONOMIC HIGHLIGHTS: JANUARY 2009 
 
This message is sensitive but unclassified.  Please handle 
accordingly. 
 
¶1. (SBU) Stock Exchange Begins Year on Down Note: Morocco's 
benchmark Casablanca MASI index has started the year on a 
downbeat note, falling below 10,000 for the first time since 
January 2007.  Despite a brief technical correction on 
Friday, January 8, the index, which lost 13 percent in 2008, 
resumed its downward spiral on Monday, January 12, ending the 
day at 9548.80.  Volumes have been thin, and analysts point 
to an absence of buyers in the market, given continuing 
uncertainty over the world economy.  Real estate developer 
Addoha has experienced some of the steepest declines, on 
continuing concerns about weakness in the real estate sector. 
 Press reports indicate that with the accelerating slowdown 
in higher end properties, the company is reorienting itself 
towards "social housing," a sector for which it earlier had 
little time.  Given concerns about real estate and exports, 
market analysts predict continued market weakness through the 
first half of 2009. 
 
¶2. (SBU) Anti-corruption Headlines January 6...: Rabat marked 
Morocco's "National Day to Combat Corruption" with the first 
meeting of the new Central Agency to Combat Corruption. 
Members of the 45-person plenary met to map their strategy 
over the coming months.  In meetings with us, as well as in 
his comments to the press, Agency head Abdeslam Aboudrar has 
made clear that he intends to use his bully pulpit to 
encourage greater government action against corruption and 
will go beyond consultation to propose "concrete steps" to 
the government.  Two Gendarmerie officers in Settat were the 
first victims of the new anti-corruption drive, as they were 
arrested and charged with accepting bribes on January 5.  We 
are exploring internally and in cooperation with other donors 
how we can most effectively support Aboudrar's work. 
 
¶3. (SBU) ...While Morocco's Competition Council Finally Takes 
Shape: Also on January 6, Prime Minister Abbas El-Fassi 
inaugurated Morocco's long-awaited Competition Council, 
another component of the country's effort to "upgrade" its 
economy and ensure transparent and fair competition.  The 
installation followed by eight years the adoption of the law 
establishing the Council in 1999.  Council President Abdelali 
Benamour dismissed arguments that the council, which like its 
corruption counterpart lacks enforcement authority, will be a 
"paper tiger."  His royal nomination, he insisted, is 
synomynous with enhanced prerogatives, means, and autonomy." 
He added that the council will need some time to learn to 
carry out its monitoring mission effectively.  At that point, 
he said, enhancement of the council's mandate might be 
appropriate.  Members of the audience observing the council's 
installation expressed surprise and no small consternation 
that the 12-member panel included no women, an oversight that 
senior Primature officials themselves criticized in comments 
following the ceremony. 
 
¶4. (U) Eight Million: A ceremony at Marrakech airport last 
week marked Morocco's attainment of 8 million tourists in 
2008, an important milestone on its way to the target of 10 
million visitors established in its "Vision 2010" program for 
the sector.  Arrivals increased 7 percent last year, down 
from the double digit increases that marked earlier years, 
led principally by increases from Arab states, the 
Netherlands, Spain, and Poland.  With the international 
economic crisis, observers expect that Morocco is unlikely to 
reach its 2010 goal of 10 million tourists until some time 
after the target year.  Some critics question the Ministry's 
statistics, arguing that inclusion of Moroccans resident 
abroad in the total (they represented a third of all arrivals 
in 2008), artificially inflates the numbers.  The industry is 
braced for a difficult year in 2009, as most of its principal 
markets are in recession.  We plan to attend an annual 
tourism industry meeting this week in Marrakech, and will 
report further on the sector's plans thereafter. 
 
¶5. (SBU) Budget Approved: Morocco's 2009 budget was approved 
by Parliament in the final week of December and published in 
the Official Bulletin on December 31.  The budget plan is 
notable for its strong concentration on social sectors (55 
percent of total expenditure) and for the increased 
investment spending it provides for key infrastructure and 
other projects (commentators note the increase is three times 
the increase in recent years).  Press commentary has also 
focused on the increased spending on the military, with 
allocation of funding to purchase new weapons systems, 
including the F-16 fighter.  Finance Minister Mezouar has 
stressed that the budget is ambitious but attainable, and 
underlined the conservative projections on which it is based, 
including notably oil at 100 USD a barrel and only modest 
increases in tax revenue.  Morocco's growth forecast has been 
moderated, down to 5.8 percent from the government's earlier 
hope for 7 percent growth through 2010, but most observers 
expect still more slippage, as the impact of the world 
economic slowdown hits home.  The budget also continues the 
Ministry's incremental approach to tax reform: the top income 
tax bracket will fall to 40 percent, from 42 percent, and the 
threshold at which taxes are first levied has been raised 
slightly to 28,000 MAD (3,500 USD).  Parliament largely 
ratified the government's vision: the only notable changes it 
introduced were the threshold change, as well as exemption of 
electricity imports from VAT to aid in efforts to meet the 
country's looming capacity shortage. 
 
¶6. (U) Fuel Shift Brings Higher Prices: (U) Morocco intended 
to start the new year with the removal of leaded gasoline and 
two more-polluting blends of diesel fuel with a sulfur 
content of 350 and 10,000 parts per million (ppm) from the 
consumer market.  However, distribution delays of the new 
unleaded gasoline and 50 ppm diesel due to end of year 
holidays, large residual stocks of 10,000 and 350 ppm fuel, 
and insufficient capacity of domestic refineries to produce 
sufficient 50 ppm diesel has forced a phased introduction. 
The Ministry of Energy announced that the transition to only 
unleaded gasoline and 50 ppm diesel will be complete in April 
¶2009.  The discontinuation of 10,000 ppm diesel has elicited 
calls for strikes from the trucking sector, who object to the 
state-decreed price of the cleaner fuel.  The 50 ppm fuel 
will be sold at the old price of 350 ppm diesel (MAD 10.13 
per liter, approximately USD 1.25 per liter, or USD 4.70 per 
gallon), and therefore will not affect the budget of 
motorists driving passenger vehicles.  However, the new price 
represents a forty percent increase from the price of the 
10,000 ppm diesel currently fueling heavy trucks.  Media 
reports in late December indicated that the Ministry of 
Energy may lower the price of 50 ppm diesel after 10,000 ppm 
stocks run out, but a significant increase from the old 
diesel price could raise the prices of basic food and 
products across the board. 
 
 
¶7. (U) Investment Update: 23 new investment projects were 
approved last week by the government for a total of 16 
billion MAD, or 2.5 billion USD.  The projects were across a 
range of sectors, including tourism, aviation, chemicals, 
energy, and agro-industry.  Analysts will be watching closely 
to see how the ongoing international crisis impacts foreign 
investors' plans.  Separately, Miloud Chaabi, head of Ynna 
Holding (one of Morocco's largest business empires) angrily 
criticized the "pressures and obstacles" that have held up 
government authorization of many of his own investment 
projects, and said that as a result he does not plan to 
undertake any new investments. 
 
 
 
***************************************** 
Visit Embassy Rabat's Classified Website; 
http://www.state.sgov.gov/p/nea/rabat 
***************************************** 
 
Riley