Morocco Facing the global economic crisis

For faster growth and more widely shared prosperity

00

M. Nizar BARAKAMinister of Economic and General Affairs

II - The global economic crisis impacts

I - Morocco : economy advantages

1

III - Our strategy to mitigate the crisis effects

IV - A new governance style

I - Morocco : economy advantages

A strong and diversified growth

Stable macroeconomic framework

2

Strong and healthy financial system

A more open economy and a more attractive economy

A decreasing unemployment rate

An Improving level of life

Global GDP

0123456789

in %

Average growth : 3,3% Average growth: 5,1%

An increasing average growth

A strong and diversified growth

3

01999 2000 2001 2002 2003 2004 2005 2006 2007 2008

01234567

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Average growth: 4,3% Average growth: 5,4%

GDP An increasing Non agricultural growth

Stable macroeconomic frameworkA balanced budget% GDP

-2,6%

-4,1%

-3,1% -3,0%

-3,9%

-1,5%

0,3% 0,5%

-0,8%

-3,2%

-2,1%

-1,4%-1,8%

0,7%

2,9%

3,8%

-5,5%

-4,2% -4,4%-4,0%

-5,2%

-2,0%

-0,2% 0,0%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

privatization income

excluded

Overall position

subsidies excluded(fuel, cereals)

-1

0

1

2

3

4

5

1999 2000 2001 2002 2003 2004 2005 2006 2007

Current account surplus between 2001 and 2007

Situation proche de l’équilibre

% GDP

4

2001 2002 2003 2004 2005 2006 2007 2008

-2

0

2

4

6

8

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

6.2% between 1990 and et 1995

1,9 % between 1996 and 2008

In % A mastered inflation A decrease in public and external debt

points -

14,310,2

47,8

60,9

16,5

2003 2004 2005 2006 2007 2008

public debet external debt

% GDP

A solid financial sector supporting development

Deposits

Banking

In % of GDPVolumes in Billions USD

31

72

2003 2008

Average growth: 19%61

86

2003 2008

Strong and healthy financial system

5

Loans

MarketcapitalizationCapital

markets

gsector

25

69

2003 2008

49

81

2003 2008

Average growth: 18%

22

69

2003 2008

Average growth: 30%

43

82

2003 2008

A solid financial sector supporting development

In billionsUSD

An increasing credits extended to economy

0

20000

40000

60000

80000 +30,8%

Strong and healthy financial system

6

2003 2004 2005 2006 2007 2008

In % A continued decline in interest rates

0,00%

2,00%

4,00%

6,00%

8,00%

10,00%

12,00%

14,00%

1993 1998 2000 2004 2007 2008

52 weeks

2 years

5 years

870 basis points

900 basis points900 basis points

A more open economy and a more attractive economy

0

20

40

60

80

100

2003 2004 2005 2006 2007 2008

An increasing opening rate of the economy

+46,6%In %

7

Commitment to Free Trade and Regional Integration

In Millions USD

Positive evolution of Foreign Direct Investments

010002000300040005000

1999 2000 2001 2002 2003 2004 2005 2006 2007

+300%

MULTIPLE FDI PROJECTS COMING ON STREAM IN MOROCCO

STMicroelectronicsSTMicroelectronicsSTMicroelectronicsSTMicroelectronics

Offshoring - BPO

Offshoring - BPO

Aéronautique

Aéronautique

Automobile

Automobile

STMicroelectronicsSTMicroelectronics

Offshoring - BPO AeronauticsAutomotive Electronics

Textile Food Industry

A more attractive economy

85

+40 franchisees en 2008

Clothing, 26%

catering , 7%

Furniture, 7%

Shoes, 5%

An increasing number of franchisees

+470 franchisees since 2002

Attractivity is a reality

A decreasing unemployment rate

14,7

22

17192123 Urban unemployment rate

In %

A proactive employment policy

99

9,613,8

579

11131517

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

National unemployment rate

Treasury debt

400045005000

Annual Average growth : 6,3%

GDP per capita (purchasing power parity)

An Improving level of life

A significant improvement of purchasing power

1019

100015002000250030003500000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

28 25,1

14 516,5 15,315202530

PovertyDecreasing poverty and vulnerability

-42%

-41%

Improvement of level life

1119

10,4 7,64,8

14,515,39

05

1015

1994 1999 2001 2004 2007

urban area rural area pauvrety rate

-37%

II -The global economic crisis impacts

1 - A more resilient economy toward exogenous chocks

12

2 - The spreading channels of the crisis

3 - Global economic crisis : the challenges

1-A more resilient economy toward exogenous chocks

Toward regular shocks associated with rainfall volatility

15

diversification of the GDP growth now less volatile

13

-10

-5

0

5

10

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Toward energy and food crisis: Budgetary capacity to fund subsidies

1-A more resilient economy toward exogenous chocks

0,5

5,1

-6

-4

-2

0

2

4

6

2004 2005 2006 2007 2008

% GDP

Subsidies

Budget evolution30

14

6

0

5

10

15

20

25

Venezuela

IranUkraine

Vietnam

JordanieRussie

EAU

Bulgarie

IslandePakistan

Egypte

Arabie

LibanTurquieEstonie

Philippines

Bangladesh

IndonesieArgentine

Kow

eitChili

Equateur

Roum

anieSyrie

IndeColom

bieCroatie

Uruguay

TchéquieSingapour

Chine

Hongrie

Malaise

Slovenie

ThailandeBrésil

Pérou

TunisieM

exiqueIsraelHongK

ongCorée du

Chypre

Belgique

Australia

Espagne

Gréce

Algérie

Taiwan

Nouvelle

Etats-U

nisPologne

Slovaquie

Maroc

FinlandeRoyaum

e-M

alteLuxem

bourZone euroIrelandeAutriche

Suéde

ItalieFranceDanm

arkPortugale

Norvége

Pays-bas

Allem

agneSuisse

Canada

Japon

Morocco is among countries that mastered inflation at low level

Toward Financial crisis: A sound financial system

1-A more resilient economy toward exogenous chocks

10%

20%

30%

40%

50%

60%

70%

80%

banking sectorNon banking SectorMediane

Morocco depends weakly resources currencies

The commitments in foreign currencies of enterprises represent just 3.3% of

External liabilities of banks represent 1.2% of their resources.

15

0% Equateur

Chine

Colom

bie

Argentine

Thailande

Mexique

Indonesie

Afrique du S

ud

Inde

Maroc

Brésil

Tunisie

Pérou

Philippines

Egypte

Vietnam

Uruguay

Turquie

Chili

Ukraine

Malaisie

Pologne

Tchéquie

Slovaquie

Roum

anie

Bulgarie

Hongrie

Source: BRI

loans.

Moroccan banks do not hold claims "toxic"

2- The spreading channels of the economic crisis

Expected slowdown on the external demand in 2009

195

215

235

255

Demande mondialeexportationsDemande zone euro

EVOLUTION OF THE GLOBAL DEMANDINDEX EVOLUTION OF MOROCCAN EXPORTS INDEX

1998-2009

Mondial demand

Exports

European demand

16

95

115

135

155

175

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

European demand

2- The spreading channels of the economic crisis

20000

40000

60000

-23,3%

-2,4%-3,5%

17

02006 2007 2008

voyages transferts MRE Recettes investissementsDecrease in Moroccan migrants money transfers (2,4%)Decline in tourism incomes (3,5%)Regression of FDI flows (23,3%)

3 - Global economic crisis : the challenges

Growth slowdown of non-agricultural sectors

Increase in unemployment

18

Increase in current account deficit

Less external financings

III - Our strategy to mitigate the crisis effects

More support to the domestic demand

19

Support sectors affected by the crisis

StrategyStrategy

Prepare the after crisis

Growth

120

140

%65+

Accelerate the pace of big structuring projects

An increasing public investment

1- More support to the domestic demand

In Billion Moroccan dhs

205

20

40

60

80

100

120

2002 2003 2004 2005 2006 2007 2008 2009

% 13,8 +

%65+

1- More support domestic demandMajor infrastructure development programs

Highways, roads and railways: 1’000 km of highways, 15’000 km of rural roads and railways

Major integrated infrastructures (e.g., « Tanger Med »): launch of a port in the North of Morocco at international standards, one of the top 3 ports in the Med

Energy policy: massive investment programs in power generation and clean renewables and liberalization agenda

Utiliti i d l t f l l t ifi ti (PERG) t

USD 10-15 bn

USD 2-3 bn

USD 2 bn

21

Utilities: massive development of rural electrification (PERG), water distribution (PAGER) and waste management

Sustainable development / Water resources: modernization of water efficiency systems in agriculture and new sustainable sources (pipeline, desalinization, dams)

Social Housing and urban development (200’000 houses p.a.)

USD 1.5 bn

USD 6 bn

USD 15 bn

An integrated Logistics Hub• 14 kms from Europe• Top 3 ports in Mediterranean• Full logistics integration

• Breakthrough developments • in industry in record time

TangerMed: an example of integrated development plan

AutomobileAutomobile

1- More support domestic demand

22

35 000 to 40 000 jobs in past

5 years

• About €600 millions investment• 400 000 cars produced yearly

(for export)• Over 35 000 jobs• 15-20 activities locally integrated

+

35 000 to 40 000 jobs in past

5 years

• About €600 millions investment• 400 000 cars produced yearly

(for export)• Over 35 000 jobs• 15-20 activities locally integrated

+

Protect purchasing powerIncome improvement

Mastered Prices

Reinforcement of social security

1- More support domestic demand

23Enhancement of rural zones

Enlargement of the health care coverage

Setting an insurance for job loss

Designing a conditional cash transfer program

National Initiative for Human Development

Enhancing human development

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2- Supporting sectors affected by the crisis

Financial support :creating a guarantee fund to improve the financial situation of firmsCommercial support : Support marketing efforts to find new destinations for export (creation of a fund to support exports)

Exports activities : the need to preserve jobs

24

(creation of a fund to support exports)

Social support : giving financial support the employer charges (100%) in affected sectors such automobile, textile and leather

Tourism : preserve the sector attractiveness (“cap 2009” plan)

3- Prepare for the after crisis

coherent agenda of structural reforms

AgricultureMorocco green plan

IndustryNational pact of development Water and environment strategy

25

Plan AzurEnergy strategy Capacity buildingEducation and training

Tourism strategyAzur Plan

IV - A new governance style

Mandatory Asset declarationsCreation of anti corruption agencyCreation of a Special Control Unit Against Money Laundering

Moralization and civism

C t ti With :

26

Contracting partnership

With :Private sectorPublic companies (contractual programs)Social partners

Launch of the “competitiveness council”Creation of the Moroccan agency to promote investmentCreation of agency to promote agricultureCreation of the comitee of business climate

Institutional dimension

Thank you for your attention

27

Thank you for your attention