Overview

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, greater separation of powers, and increased decentralization. The current coalition government is led by moderate Islamist party, PJD (Party for Justice and Development) and composed of 4 parties. In 2013, differing views among coalition members over economic reforms led to the withdrawal of the Istiqlal party (conservative historical party) and the introduction of the RNI (Rassemblement National des Indépendants) a center liberal party. The government is continuing to roll out the last pending constitutional reforms and pursuing the implementation of promised subsidy, pension and capital market reforms.

On local governance and as the country is engaging in a promising regionalization agenda, the country held regional and local elections in September 2015 that defined a new local political map where two major political players emerged: ruling PJD and opposition party PAM (Party for Authenticity and Modernity – close to the Palace). While the latter dominated the leadership of the country’s regions (5 out of 12), PJD is the clear winner in the management of Morocco’s largest cities. This new share of political powers will redefine the government coalition that will emerge from the 2016 legislative elections.

On the economic front, and after a strong economic performance in 2015, the Moroccan economy is sharply decelerating in 2016; illustrating the typical production swing of an economy still dependent on rain-fed agriculture. Thanks to an exceptional 2014/2015 agricultural season, economic growth rebounded to 4.4 % in 2015. However, with the current drought, the 2015/2016 cereal production will be much below average and will drag down total GDP growth below 2 % in 2016.

In response to deteriorating fiscal trends, Morocco has embarked on a major fiscal consolidation effort since 2013. The government initiated in 2013 the reform of the subsidy system and began to rein in other recurrent and investment expenditures, while consolidating tax revenues. As a result, the fiscal deficit decreased from 7.2 % of GDP in 2012 to 4.3 % of GDP in 2015.  

Improvements on the external front have been even more spectacular. The current account deficit, which culminated to 10 % of GDP in 2012, was reduced to 2.3 % of GDP in 2015. This reflected the combination of lower imports, as a result of the sharp fall in international oil prices, and higher exports from the “new” industries (automobile, aeronautics, and electronics) as well as from the agro-industrial sector.

Notwithstanding the ups and downs of the agriculture sector, Morocco’s economic growth has slowed down in recent years. On average, real GDP grew by 3.8 % during 2013-2015 underperforming its trend of 4.6 % per annum during 2003-2012. While domestic demand had been the main driver of growth before 2012, its contribution started to weaken in 2013.

Morocco has scaled up its structural reform agenda, but implementation of this agenda remains key to show transformational results. The 2016 Budget Law confirmed the Government's resolution to solidify the tax base, rein in expenditures and implement a pension reform that would lengthen the system sustainability and reduce its contingent liabilities. Along with the ongoing subsidy, fiscal and financial reforms, all these actions are contributing to consolidating the macroeconomic framework, improving the business environment, and enhancing higher and inclusive growth potential.

Last Updated: Mar 31, 2016

The Country Partnership Strategy (CPS) for Morocco covering the years 2014-2017 draws from extensive consultations with representatives of government, civil society, private sector, and other key development stakeholders. The 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 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. Actual lending for the first 3 years is expected to have met that. 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. Since the CPS has reached its two years implementation period, the Bank in close collaboration and consultations with the client and other stakeholders, is now completing a Performance and Learning Review (PLR) to assess progress in the implementation of the CPS at mid-term and, where necessary, to introduce changes to stay aligned with the Government’s priorities while addressing the rise in visibility of some pressing issues (e.g. youth and employment, performance of the education sector, territorial and demographic disparities, decentralization and local development) and focus of the new MENA regional strategy on the consolidation of the social contract between the State and the citizen. 

World Bank operations carried out since the start of the 2014-2017 CPS have been generally consistent with the CPS program and covered a wide range of key areas. Development Policy support (45.1% of portfolio as of today) has focused primarily on economic competitiveness, skills and employment, green growth, solid waste management, capital markets and SME finance. Where applicable, and in addition to its pioneer support to Morocco’s national human development initiative (INDH), the Bank has been increasingly resorting to its new and innovative Program-For-Results (PforR) instrument to enhance the implementation of large development programs requiring strong results-focus and institutional capacity strengthening. Two PforR operations (14.5%) were approved, focusing on primary health care in rural areas and urban mobility respectively and one is under preparation for an integrated management of natural disasters risks. Emphasis of Investment projects (40.4%) was concentrated on efficient and renewable energy, rural roads, water supply, and large scale irrigation.


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

*Amounts include IBRD and IDA commitments