Morocco engaged in a program of wide-ranging reforms with the adoption of a new Constitution in 2011, which laid the foundations for a more open and democratic society, a more modern state with law and institutions, greater separation of powers, and increased decentralization. The country’s current coalition government is led by moderate Islamist party, PJD (Party for Justice and Development), and composed of four parties. The government is continuing to roll out the last pending constitutional reforms and pursue promised subsidy, pension, and capital market reforms.

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

After a good performance in 2015, the Moroccan economy is decelerating in 2016. Economic activity slowed to 1.4% in the second quarter as a result of a 12.1% contraction in agricultural production, while growth outside the agriculture sector remained sluggish at around 2.5%. Inflation has remained muted at under 2%, reflecting prudent monetary policy and the fall in international commodity prices.

With the successful liberalization of petroleum prices (gasoline and diesel) and other fiscal consolidation efforts that have been made since 2013, Morocco’s fiscal deficit has been on a downward trajectory and its external current account has improved significantly. Based on performance since the beginning of 2016, Morocco is expected to reduce its fiscal deficit to 3.5% of GDP. This would be the result of strong revenue performance and the continued reduction in consumption subsidies. Morocco should thus be able to stabilize its central government debt at around 64% of GDP. On the external front, the trade deficit narrowed down in recent years as a result of fiscal consolidation efforts and the emergence of Morocco’s new industries, especially automobiles. The current account deficit should not exceed 1.5% of GDP for 2016, and Morocco’s international reserves reached US$24.9 billion—the equivalent of 7.3 months’ worth of imports at end-June 2016.

Morocco’s respectable per-capita income growth in recent years has contributed to eliminating extreme poverty and significantly reducing poverty, although disparities persist and employment remains low. While the poverty rate declined from 8.9% in 2007 to 4.2% in 2014, nearly 19% of the rural population are still living in poverty or are vulnerable.

At around 47% in the second quarter of 2016, the employment rate is low and dropping, and the type of new jobs being created are generally informal and precarious. While overall unemployment has remained broadly stable at around 9% in recent years, the rate among urban youth is much higher, increasing to 38.8% by June 2016.

Over the medium-term, Morocco should be able to accelerate its economic growth rate while maintaining macro-economic stability. The strong performance of newly developed industries (automobile, aeronautics, and electronics) and the expansion of Moroccan companies into West Africa are creating the conditions for Morocco to boost its global value chains. However, economic prospects and its medium-term macroeconomic stability depend on the pursuit of sound macroeconomic policies and the deepening of structural reforms aimed at accelerating productivity, reducing youth unemployment, increasing female labor force participation, and reducing further poverty and inequalities. Assuming the full implementation of a comprehensive reforms following the fall 2016 parliamentary elections, growth could accelerate toward 4% over the medium-term, with inflation kept at around 2%.

Last Updated: Sep 30, 2016

The Country Partnership Strategy (CPS) for Morocco covering the years 2014–2017 draws on extensive consultations with representatives of government, civil society, the private sector, and other key development stakeholders. The framework revolves around three areas for strategic results: 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 cross-cutting themes.

Under the current CPS, the Bank has been scaling up its support to Morocco, with an IBRD lending program that has increased from US$600 million a year to just over US$1 billion a year over the four-year period of the CPS. Actual lending for the first three 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, an improved quality of public services, good governance, social protection and subsidy reform, and strengthening inclusion and voice for women and youth.

As the CPS has passed the mid-point of its implementation period, in close collaboration and consultations with the client and other stakeholders, in Spring 2016 the Bank  completed a Performance and Learning Review (PLR) that assessed progress in the implementation of the CPS at mid-term and, where necessary, introduced changes to stay aligned with the Government of Morocco’s priorities, while addressing the rise in visibility of some pressing issues ( youth and employment, the performance of the education sector, territorial and demographic disparities, decentralization and local development) and focusing the new MENA regional strategy on the consolidation of the social contract between the citizen and the State. Overall, the PLR showed that the CPS remains highly relevant and that its cross-cutting themes of youth, gender, and voice are well-aligned to the first pillar of MENA’s new strategy—renewing the social contract. While not recommending any changes to the CPS’s strategic objectives and areas for results, it does propose that adjustments be made to the new lending and Advisory Services and Analytics (ASA) planned for the remainder of the CPS period. In particular, to further strengthen linkages to the MENA strategy, some of the operations originally planned have been dropped in order to consolidate interventions that directly address issues of youth, gender, education, inequality, and employment-generating activities. Preparation for a Strategic Country Diagnosis has been launched this FY17 to inform the design of the next 2018–2021 Country Partnership Framework.

World Bank operations since the start of the 2014-2017 CPS have been generally consistent with the CPS program and have covered a wide range of key areas. Development policy support under the CPS (54% of new lending over FY14–16) 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, or  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 a strong results focus and strengthening institutional capacity. Three new PforR operations (16% of new lending) were approved, focusing on primary health care in rural areas, urban mobility, and the integrated management of natural disasters risks, respectively. An Emphasis of Investment projects (30% of new lending) was concentrated on efficient and renewable energy, rural roads, water supply, and large scale irrigation.


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

*Amounts include IBRD and IDA commitments