Overview

Morocco’s political landscape has been relatively stable in past decades and evolved smoothly through the Arab Spring. Morocco engaged in a program of wide-ranging reforms with the adoption of a new Constitution in 2011, which set the basis for a more open and democratic society, a more modern state of law and institutions and increased decentralization. The current coalition government, led by moderate Islamist party, PJD (Party for Justice and Development), is continuing to roll out constitutional reforms and taking bold steps to reduce the fiscal deficit, namely through the phasing out of fossil fuel subsidies.

On the economic front, Morocco had a mixed economic performance in 2014. Economic growth decelerated from 4.4 percent in 2013 to an estimated 2.6 percent as a result of a decline in agricultural output due to insufficient rainfall and a lackluster growth performance outside agriculture, especially manufacturing. Unemployment worsened to almost 10 percent while inflation reached its lowest rate on record at 0.4 percent thanks to a prudent monetary policy and afall in international commodity prices.    

Progress toward fiscal consolidation and improvement in external indicators underscored Morocco’s commitment to preserve macroeconomic stability. In 2014, the consolidation of public finance was confirmed with the pursuit of the fuel subsidy reform initiated in 2013 and measures to rein in recurrent expenditures. As a result, the budget deficit decreased from 5.4 percent in 2013 to 5 percent of GDP.

Morocco’s economic outlook hinges on the pursuit of sound macroeconomic policies and an acceleration of structural reforms. This year, growth will benefit from a good rainfall season and the sharp decline in international oil prices. GDP is projected to grow by 4.6 percent. The 2015 Budget Law confirmed the Government's resolution to solidify the tax base, rein in expenditures and launch the reforms of the pension system.

The recent adoption of the Organic Budget Law should enhance central and local governments' budget design and implementation for better public service delivery and efficiency over the medium term. To improve further the investment climate, the Government announced its intention to proceed with justice reform, improve access to financing, especially for the SMEs, and address access to land constraints. Assuming full implementation of these reforms, including the commitment to reduce the budget deficit to 3 percent of GDP by 2017, growth should pick up to around 5 percent over the medium term, with inflation kept below 2 percent. 

Last Updated: Mar 31, 2015

A new World Bank Group Country Partnership Strategy (CPS) for Morocco for 2014-2017 was presented to the Board on April 29, 2014. The strategy draws from extensive consultations with representatives of government, civil society, private sector, and other key development stakeholders. The new framework revolves around three strategic results areas: Promoting competitive and inclusive growth; Building a green and resilient future; and Strengthening governance and institutions for improved service delivery to all citizens. Gender, youth, voice and participation have also been retained as crosscutting themes.

Under the new CPS, the Bank is scaling up its support to Morocco, with an indicative IBRD lending program increasing from $600 million a year to $1 billion a year over the CPS four-year period. The CPS program aims at stepping up and consolidating Bank Group engagement around multi-sector issues, such as economic competitiveness, improved quality of public services, good governance, social protection and subsidy reform, and strengthening inclusion and voice for women and youth.

While Development Policy Loans (DPLs) will continue to be a defining aspect of the lending program in Morocco given the maturity of reform programs in several areas such as governance, competitiveness, employment or green growth, the Bank will also continue to implement important sector-specific investment programs, particularly in water and sanitation, energy, roads and agriculture projects.  Where applicable, the Bank will increasingly resort to its new and innovative Program-For-Results (PforR) instrument, currently supporting the National Initiative for Human Development (INDH2), to support the implementation of large development programs requiring strong results-focus and institutional capacity strengthening (e.g. in the health and urban transport sectors). The sharing of knowledge and technical expertise, including through South-South exchanges, will also continue to form an integral part of the Bank’s relationship going forward.

Last Updated: Mar 31, 2015

Over the course of the previous Country Partnership Strategy (2010-2013), the World Bank Group support program achieved satisfactory results combining analytical work, lending operations and technical assistance. The program helped mainly address private and financial sector reform, access to education and basic services, reduced vulnerability and social exclusion, improved agriculture sector and solid waste management.

Area 1: Growth, competitiveness and employment:

  • Support to the country’s competitiveness framework: Through a set of policies and regulatory mechanisms to improve business environment and attract investments. The country’s ranking went from 124th of 181 economies in 2009 to 87th of 189 economies in 2013
  • Enhanced reform of the financial sector, an IFC-World Bank support package combining lending, technical assistance and advisory services: improved household access to finance, strengthened credit infrastructure for small businesses, improved liquidity etc.
  • Promoting employment: Building a better match between trainings and job market demand, supporting youth micro-entrepreneurship and helping insertion of youth and women in the labor market.

Area 2: Service delivery to citizens

  • Improved access to education: Morocco significantly increased primary school enrollment rates, building of school infrastructures especially in remote areas, support to the ministry of Education’s decentralization process and improved sector governance.
  • Support to the National Initiative for Human Development: A complete support package to help Morocco achieve its poverty reduction targets and improve access to opportunities and basic infrastructure to vulnerable people.
  • Improved access to basic infrastructure: Improved water and sanitation infrastructure and supporting Morocco’s rural roads program in lagging regions.
  • Improved performance and governance of the solid waste sector management: Lending and technical assistance operations helped address some of the sector’s performance and management challenges.
  • Improved justice sector service delivery: Supporting the introduction of international best practices in court management.
  • Building stronger social safety nets: Technical assistance to social protection programs, namely the Tayssir pilot program (a conditional-cash transfer mechanism) aimed to reducing school drop-out rates, or the RAMED program (non-contributory insurance for poor and vulnerable segments)

Area 3: Sustainable development in a changing climate

  • Support to Morocco’s Plan Maroc Vert (PMV – the country’s strategy to enhance agriculture sector performance): bringing a substantial shift away from a highly protected market to a more open market-oriented agriculture to create better opportunities for farmers
  • Adaptation to climate change : Strengthening Moroccan farmer’s capacity to adapt to climate change and integrating sustainable agricultural practices in the PMV
  • Improved risk management strategy: Supporting Morocco’s program on natural disasters risk management and predictability and scaling up cross-sectoral coordination.

 

Last Updated: Oct 01, 2014


LENDING

Morocco: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments