VZCZCXYZ0009
RR RUEHWEB

DE RUEHRB #0119/01 0371658
ZNR UUUUU ZZH
R 061658Z FEB 09
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 9640
INFO RUCNMGH/MAGHREB COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS RABAT 000119 
 
SIPDIS 
SENSITIVE 
 
DEPARTMENT PASS TO USTR FOR PAUL BURKHEAD 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EFIN EAGR MO
SUBJECT: MOROCCO UNVEILS ANTI-CRISIS MEASURES BUT STILL 
FORSEES STRONG 2009 GROWTH 
 
REF: A. RABAT 109 
     ¶B. RABAT 39 
     ¶C. CASABLANCA 14 
 
This message is sensitive but unclassified.  Please handle 
accordingly. 
 
¶1. (SBU) Summary: In the first meeting of his strategy 
committee on the international economic crisis, Minister of 
Finance Salaheddine Mezouar on February 4 unveiled the 
government's initial plans to mitigate its impact on 
Morocco's manufacturers.  On the table are measures to aid 
enterprises in difficulty by paying their social security 
contributions, making available short-term operational 
funding, and supporting exports both through export promotion 
and expanded export insurance.  Companies in difficulty will 
also benefit on a "case-by-case" basis from other 
"transversal" measures.  Even as Mezouar announced these 
measures, many of whose details remain to be worked out, 
Morocco's High Planning Commission (HPC) predicted that 
strong agricultural growth will more than counterbalance the 
emerging downturns in tourism, industry, and foreign 
investment.  It forecast GDP growth of 6.7 percent in 2009, 
based on an expected increase in agricultural growth of 22.3 
percent.  He did add, however, that the crisis's impact will 
lead to a deterioration in Morocco's international position, 
with a growing current account deficit and declining 
international reserves. End Summary. 
 
¶2. (U) Mezouar's Strategy Committee, which builds on the 
Study Group he announced last October, met for the first time 
on February 4th to review where Morocco stands as the 
international economic downturn deepens.  Present were key 
economic ministers, the head of the Bank al-Maghrib, and key 
private sector leaders, including the heads of business and 
banking associations.  The three key measures Mezouar 
outlined are designed to tackle the problems of Morocco's 
most vulnerable manufacturing sectors, and thereby answer 
their criticism (ref c) that government promises have yet to 
be transformed into real programs.  (Note: Septel will 
address Morocco's emerging plans for the tourist sector.  End 
Note.)  Mezouar noted that many details remain to be worked 
out, but in broad outline they will include: 
 
-- State financing of part of the social security 
contributions owed by companies in difficulty, on condition 
that the firms retain and do not lay off their employees 
(press reports already speak of 60-70,000 layoffs in the 
textile sector alone); 
 
-- Provision of a State guarantee of between 50 and 65 
percent of operational financing provided by banks to 
manufacturing companies, aimed at ensuring they retain access 
to sufficient liquidity to continue operating; 
 
-- State support for exports, both through the direct export 
promotion measures contained in the 2009 budget, and through 
expansion of Morocco's government-supported export insurance, 
to help companies cope with the risk of default by their 
foreign clients and with lengthening payment delays. 
 
¶3. (U)  Initially, eligibility for these programs will be 
limited to companies in the auto, textile, and leather 
industries that have experienced at least a 20 percent drop 
in turnover from last year.  In addition, other "transversal" 
measures will be implemented on a case-by-case basis.  Among 
them, possible customs relief for companies that imported 
large quantities of inputs that they have not used because of 
the downturn in demand for their products. 
 
¶4. (U) Shortly after Mezouar announced his plans, on February 
5 the Moroccan government's chief economic forecaster 
unveiled new projections which underline the extent to which 
Morocco's vulnerabilities may be counterbalanced (at least on 
the growth side) by what is anticipated to be a bumper 
agricultural harvest.  High Planning Commissioner Ahmed 
Lahlimi predicted that Morocco would register 6.7 percent 
growth this year (above the Ministry of Economy and Finance's 
own 5.8 percent forecast), with 22 percent agricultural 
growth more than offsetting a slowdown in non-agricultural 
sectors (down to 3.9 percent growth from 5 percent in 2008). 
Lahlimi predicted that agriculture would contribute 3.2 
percent of the overall growth figure (up from 1.3 percent 
last year). 
 
¶5. (U) While he also forecast declining inflation (down from 
3.9 to 2 percent), all was not roses in HCP's forecast. 
 
Lahlimi predicted that declines in tourism, remittances, 
foreign investment, and exports will compound Morocco's 
"structural" trade deficit and lead to deterioration in 
country's international position.  The growing current 
account deficit, he predicted, will entrain a decline of 13 
percent in Morocco's net foreign assets, leaving the country 
with an amount sufficient to cover less than 6 months of 
exports, down from 9 months as recently as 2007. 
 
¶6. (SBU) Comment: One leading government-affiliated economist 
(and former Minister) told us earlier this week that while he 
is skeptical that government action can do much to counteract 
the business cycle, what it can do is provide the critical 
support that enables businesses to survive a downturn.  In 
that way, he argued, Morocco can preserve its manufacturing 
base, and be ready to export again when market conditions 
improve.  Clearly, Mezouar's plan shares that vision, while 
also reflecting concern that the emerging global downturn may 
be longer and deeper than government officials originally 
anticipated.  End Comment. 
 
 
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Jackson