Moroccan economic indicators meet Maastricht criteria
Morocco, Economics, 6/24/1998

French bank Parisbas lauded the Moroccan budgetary and monetary policies, enforced at the end of the structural adjustment in 1993, and said the indicators posted in 1997 meet the "Maastricht criteria": inflation maintained at 1 percent and public deficit nearing 3 percent of the GDP.

In its monthly newsletter, the bank says the challenge that still needs to be faced is to end indebtedness on the basis of a better tax-levying system.

For the bank, this might take some time because whole sectors of the Moroccan economy, such as agriculture, handicraft and export, "are still out of the direct tax system". After surveying the Moroccan economic growth, which relies largely on a weather-depending agriculture, the study deems that the Moroccan economy has to get rid of weather-dependency by consolidating industrial production and the service sector, two sectors that grew at a slow pace of 3 percent, Map reported.

Regarding the banking sector in Morocco, Parisbas considers that the loan cost is "excessively high" since long-term loans which are necessary for the development of small enterprises which only represent 30 percent of the disbursed loans.

The study considers that Moroccan banks have to get out of their limited structure, since the three first banks account for 70 percent of all deposits and loans. It also argues that foreign competition is the key, for it will cause a rejuvenation in the Moroccan banking system and a decrease in interest rates.

Parisbas also notes that foreign direct investments have improved from $165 million in 1996 to $1.2 billion in 1997. However, it notes that this is mainly associated with privatization efforts, debt swap operations and the intervention of major investors, such as the French-Italian "SGS Thomson" and South Korean "Daewoo".

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