Morocco's economy mostly free, Heritage Foundation
Morocco-USA, Economics, 11/14/2002

Morocco is one of the countries with "mostly free" economy, the Heritage Foundation said in its annual report, ranking the kingdom 68th in terms of economy freedom.

On Morocco's trade policy, the foundation cites the World Bank as saying Morocco's weighted average tariff rate in 2000 (the most recent year for which World Bank data are available) was 25.8 percent. Non-tariff barriers take the form of inconsistent customs procedures.

"Morocco's top income tax rate is 44 percent; the marginal rate for the average taxpayer is 0 percent. The top corporate tax rate is 35 percent. (For banks and insurance companies, the rate is 39.6 percent. The general rate of 35 percent applied to business was used to score this factor."

In 2000, based on data from the International Monetary Fund, government expenditures equaled 34.9 percent of GDP. Based on a clarification in the methodology used to calculate the income tax portion of this factor, Morocco's overall fiscal burden of government score is 0.5 point better this year.

As to the Moroccan, government's intervention in economy, considered as "moderate," the foundation quotes the World Bank reports saying that government consumption was 19.1 percent of GDP in 2000. "In 1999, according to the International Monetary Fund, the government received 7.31 percent of its total revenues from state-owned enterprises and government ownership of property. Based on new data on revenues from state-owned enterprises, Morocco's government intervention score is 0.5 point better this year." The Heritage Foundation describes the kingdom's monetary policy as stable, with a very low level of inflation. "Between 1992 and 2001, Morocco's weighted average annual rate of inflation was 1 percent."

In the section "Capital Flows and Foreign Investment," the report says Morocco treats foreign-owned and locally owned investments equally and permits 100 percent foreign ownership, adding that there is no screening requirement for foreign investment.

According to the U.S. Department of State, "Foreign investment is now permitted in most sectors. Phosphate mining and tobacco marketing are reserved for the state and are closed to foreign and domestic investment, although the government is considering plans to offer a concession on tobacco marketing. Foreign investment is permitted in the agriculture sector, although foreigners are prohibited from owning agricultural land."

"Commodity prices are freely determined by the market without government involvement, with the exception of staple commodities such as sugar and subsidized flour. In November 2000, Morocco liberalized completely the retail prices and phased out the subsidy on vegetable oil. Further liberalization of other sectors (flour and sugar) is likely to occur over the next few years as the [government] pursues its policy to cut down its budget deficit and improve rural development prospects, the report goes, quoting the U.S. Department of State.

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