MAJOR MACRO ECONOMIC INDICATORS
|2020||2021||2022 (e)||2023 (p)|
|GDP growth (%)||-7.2||5.7||1.3||3.5|
|Inflation (yearly average, %)||0.7||1.3||6.0||5.0|
|Budget balance (% GDP)||-7.1||-5.9||-5.3||-5.1|
|Current account balance (% GDP)||-1.2||-2.3||-4.3||-4.1|
|Public debt (% GDP)||72.2||68.9||70.3||70.1|
(e): Estimate (f): Forecast
- Strategic position on the Strait of Gibraltar and close to the European market
- Institutional stability: attachment to the monarchy and to King Mohammed VI, active civil society
- Strong relations with Europe, the US and international donors
- Large inward investment from Europe and outward investment to West Africa
- Strategy to upgrade and diversify production in industry
- Inequalities (rural poverty, youth unemployment, lack of housing, corruption, etc.) and structural tensions (regional disparities, Islamist-liberal opposition)
- Dependence on agriculture (12% of GDP and 30% of the population), weakened by droughts
- Commercial dependence on the European Union, especially in tourism and industry
- Weak productivity and competitiveness regarding competition from other Mediterranean countries such as Turkey and Egypt
- Disputes over the former Spanish Sahara
Moderate but solid growth
After having suffered heavily from imported inflation and unfavourable weather conditions for agriculture, economic growth should recover in 2023 thanks to a favourable base effect, particularly in agriculture. High rainfall in the winter of 2022-2023 could remove downside risks to yields. Bumper harvests in this sector (30% of the population, 12% of GDP) would bolster consumption in rural areas. Purchasing power received a boost in September 2022 following a 5% increase in the minimum wage and a 10% increase in agricultural workers’ wages.
Coface forecasts a neutral contribution of foreign trade to growth in 2023. First, Morocco should continue to gain markets in the automotive and textile industries, on back of investment interest. The value of phosphate exports should continue to be driven by high fertiliser prices. The rebound in tourism will continue after the scrapping of the last health measures during 2022. However, risks of a slowdown are emerging from European partners. Second, inflation is likely to keep on weighing on the fuel import bill in 2023.
Investments continue to be directed towards infrastructures, while local companies that are embattled by soaring costs are cautious: in December 2022 the EBRD announced a new loan of EUR 100 million to complete the construction of the deep water port of Nador West Med on the Mediterranean coast. The government is seeking to channel investment through the Mohammed VI Fund and a 2021-2025 Industrialisation Acceleration Plan. Following the discovery of fresh gas reserves on the Atlantic coast (Anchois 2), the UK group Chariot and the National Office of Electricity and Drinking Water signed a 10-year supply agreement in December 2022. Resources are therefore expected to primarily serve local needs, thereby putting a halt to imports of liquefied natural gas via Spain and demand for Algerian gas. The Anchois 1 and 2 fields could be brought on stream by 2025. Stellantis has also announced a EUR 300 million investment package to double production capacity at its Kenitra plant.
Twin deficits under control
The public deficit is expected to remain high in 2023. The government is not expected to consolidate public finances and it has issued a budget based on more optimistic assumptions than the consensus. Exceptional aid measures to address Covid-19 and inflation are expected to decline as commodity prices generally fall. Public investment will remain considerably high, especially in health, infrastructure and education. The revaluation of civil servants' salaries and the interest burden will weigh structurally on expenditure, which will rise faster in 2023 than before the pandemic. From 2023 onwards, a reduction in the number of corporate tax brackets should help to increase revenues from large groups and reduce tax evasion. With 75% of public debt issued in local currency, public debt is expected to stabilise in the short term, with no apparent difficulties in financing it.
The current account deficit deteriorated considerably in 2022, with a sharp increase in the trade deficit owing to hydrocarbons (~20% of net imports), cereals and oils (~15%), which, admittedly, was offset by fertilisers (~12% of net exports). Crude oil prices keeping steady at around USD 90 per barrel and a drop in phosphate prices will drag on external balances. The surplus of secondary income stemming from expatriate remittances (~5% of GDP) should decline in 2023, in step with the economic slowdown in Europe. The surplus in the balance of services should be supported by stronger recovery in tourism (entries up by 92% in 2022). The dinar has depreciated against the US dollar (-20% in 2022), reflecting a relatively accommodative monetary policy (rate at 2.5% in December 2022). This monetary independence reflects the confidence of investors, both institutional and private (FDI).
Regime continues amid political policy changes
Between gestures of openness and influence on the political scene, the King can rely on a centre-right coalition resulting from the legislative elections of October 2021, after the defeat of the PJD Islamists who entered the government in 2011. The change marks a disenchantment with business meddling in public life. The Hirak Rif protest movement in 2017 led to a security crackdown and tighter surveillance of protesters. Football World Cup fervour surrounding the Lions of the Atlas team marked a short period of grace in an inflationary episode that hit the working classes hard. Aggravated by the difficult economic situation, poverty continues to push people to emigrate to Europe to join the already large diaspora.
Pursuing his traditional policy of alliance with Western countries, Mohammed VI is pressing ahead to establish an (unpopular) relationship with Israel and the United States to secure a defence industry. Backed by this support, the kingdom has considerably increased its military spending since 2021 as a result of severed ties with Algeria. The boost in military manpower afforded by compulsory military service since 2019, the Moroccan army should therefore maintain pressure on the Polisario Front independents supported by Algiers and discourage any attempts at a negotiated solution. The result of long-standing cooperation, the close link between liberal elites and France was damaged by unilateral visa restrictions from the end of 2021 to the end of 2022. Moroccan investors are taking advantage of the relative withdrawal of French companies in West Africa and support from a proactive diplomacy to recover market share, particularly in banking.
Last updated: April 2023
Bank transfers are becoming the most popular means of payment for both domestic and international transactions. Cheques are still commonly used as instrument of payment and also constitute efficient debt recognition titles: debtors may be prosecuted if they fail to pay the amount owed. Bills of exchange also constitute an attractive means of payment, because they are a source of short-term financing by means of discounting, instalment, or transfer. Promissory notes are used to record the financial details of personal debts, business debts and real estate transactions. They are legally binding contracts that can be used in a court of law if the debtor defaults. A promissory note acts as solid evidence of an agreed payment, and subsequently debt in case of dispute.
Debt collection must begin with an attempt to reach an amicable settlement. Creditors attempt to contact their debtors through different means (telephone calls, written reminders such as formal letters, emails or extrajudicial notifications, etc.). Amicable settlement negotiations can be intense, and cover aspects such as the number of payment instalments, write-offs, guarantees/collateral, and grace period interest. Moroccan law states that a lawyer can acknowledge the signature of the debtor via payment plans, which are signed, certified, and legalized by the competent authorities in Morocco. The creditors’ lawyer can subsequently use this payment agreement as debt recognition in case of legal action.
Morocco has a legal system based on French legal tradition and courts based on Islamic traditions (which relate exclusively to the personal status of litigants). Courts include proximity courts (juridictions de proximité) in charge of settling disputes between individuals, Courts of First Instance (tribunaux de première instance) dealing with all civil matters, Commercial Courts dealing with business disputes, Appellate Courts (cours d’appel) dealing with civil and administrative matters, and a Court of Cassation (Cour de cassation).
Where the debt is linked to a recognised title or promise, it is possible to obtain an order for payment. To do this, an application must be sent to the registry of the competent court. The debt must be proven, liquid (i.e. free), payable and not disputed. If the defendant does not file a defence within eight days, it is possible to obtain an enforceable decision. If the defendant submits a defence within eight days of receiving the order for payment, the case is returned to the ordinary procedure. However, the appeals chamber of the court of first instance or the court of appeal may, by reasoned judgment, suspend enforcement in whole or in part.
A writ of summons is sent by the creditor’s representative to the relevant court and served by a bailiff to the debtor, who may subsequently obtain legal representation in the period prescribed by the judge and file a counter claim. Several hearings may be required for the exchange of written submissions, transmissions of documents and to produce the relevant evidence.
The main hearing is set by the judge to hear the presentation of the pleadings. Discussions and pleadings are conducted by the judge during the public hearing. The case is then taken under deliberation to allow judges to discuss the means, grounds, and pronouncement that make up the content of the judgment. After the sitting of the judgers, a reasoned judgment is rendered. It can usually be obtained within an average delivery time of 14 months.
Enforcement of a court decision
Once all appeal venues have been exhausted, a judgment becomes final and enforceable. Garnishee orders are normally efficient for seizing and selling the debtor’s assets.
According to Moroccan law, commercial courts are obliged to recognize judgments rendered abroad, even if there is no convention signed for this purposes with the issuing country. In order to be recognized and enforced, the original copy of the foreign judgment must be provided to the court with a certificate of non-appeal. When a foreigner gets final judgment that they want to enforce in Morocco and, if not, when seeking enforcement of a Moroccan judgment abroad, they must follow exequatur proceedings. There are two enforcement procedures. The first is uniquely Moroccan, whereas the second is fixed by judicial bilateral agreement between Morocco and other countries, including Germany, Belgium, the United States of America, the United Arab Emirates, Spain, France, Italy and Libya.
Insolvency proceedings are regulated by Book V of the Commercial Code. It provides for prevention of difficulties (alert procedure and amicable settlement procedure) as well as formal insolvency procedures (judicial redress proceedings and judicial liquidation proceedings).
Because of the COVID-19 situation, Morocco has taken two measures in the framework of the insolvency proceedings:
The possibility for debtor companies to initiate the procedure to request a grace period to enable them to legally suspend payments (if the insolvency is caused by COVID-19).
The possibility of obtaining a stimulus credit dedicated to companies impacted by COVID-19.
The alert procedure is initiated by a business’ partners or auditors (external auditors hired by the company to rectify the financial situation), who are required to notify the company manager of any opportunities to redress the situation within eight days. If no steps are taken to remedy the situation within 15 days, a general assembly must be convened to take a decision on how to redress the situation based on the auditor’s report.
Amicable settlement procedure (conciliation)
Amicable settlement procedures can only be implemented by a commercial company, trader, or artisan, who is experiencing financial difficulties but is not yet cash flow insolvent. Once initiated, the debtor is placed under the supervision of the Court. The Court subsequently appoints an external conciliator for a limited period of three months to assist the debtor in reaching an agreement with its creditors. A settlement can be reached with all creditors or the debtor’s “main creditors”. Creditors are entitled to their entire claim, but the conciliator may propose an arrangement or creditors may assign a portion of the debt if they so wish. Once approved by the Court, all judicial proceedings relating to debts covered by the agreement are suspended for the duration of the amicable settlement agreement.
This is mechanism is intended to allow a company to reorganize in order to continue to survive. To benefit from it, the company must establish that it is not in a state of cessation of payments. However, in the context of this procedure, it is still possible to negotiate with your creditors, in order to avoid arriving at to this cessation of payments, to the receivership proceedings. It is the company that seizes the court, which pronounces a judgment of opening of the safeguard procedure. The procedure starts with a six-month observation period (renewable once) during which the insolvency administrator, in collaboration with the manager, draws up a “economic and social balance sheet” (BES) for the company: an update on the origin of the difficulties, he current financial situation, the corrective measures to be envisaged and the resulting prospects. During this period, the company takes appropriate measures to correct the situation, and it helps the administrator to develop a backup plan. The adoption of such a plan by the court marks the end of the observation period and the beginning of the actual plan, which can last up to five years. Here again, the manager remains master aboard his company but, above all, the company will benefit from radical measures that the court can only impose:
- suspension of maturities of debts;
- stop individual prosecutions;
- obligation for all creditors to declare their claims;
- stop interest rate.
This procedure is only available for debtors that have become insolvent (état de cessation de paiements), but whose financial situation is not irreparably compromised. An insolvency judge and an office holder (the person appointed by the court as part of an insolvency or liquidation; also acts as the syndicate) are appointed by the court. During the process, the debtor company and its management remain in possession of the company’s assets and the debtor continues its business. The receivership procedure can result in either the reorganisation of the debtor’s business or its liquidation. The office holder is required to prepare a report on the situation of the company within four months from the opening of the proceedings. In his report, the office holder will either recommend a continuation plan for the debtor, the sale of the business, or liquidation. The court is then required to reach a decision on the fate of the debtor, based on the report. There is no direct vote by the creditors on the options available to the debtor during the procedure.
The judgment initiating the procedure makes all the debts immediately due and payable, the creditors within a period of two months must present their claims. Moroccan creditors have two months to submit their declarations; creditors residing abroad have a period of four months. Liquidation proceedings may terminate prematurely before a distribution in liquidation if the debtor has no more debt, the office holder has sufficient funds to pay all the creditors in their entirety, or the debtor does not have enough assets to cover the costs of the liquidation procedure.
Under Moroccan law, there are no specific rules on the priority of claims in the event of insolvency. Nevertheless, there are some privileged creditors such as: the employees, the public treasury, the social agencies, the creditors of a collective conciliation, finally the unsecured creditors.