MOROCCO ECONOMIC HIGHLIGHTS

UNCLAS SECTION 01 OF 03 RABAT 001136

SIPDIS

DEPT FOR NEA/MAG, NEA/PI AND INL/AAE
DEPT ALSO FOR EB/TPP, EB/IFD AND DRL/IL
STATE PASS USTR FOR DOUG BELL
STATE PASS USAID FOR SARA BORODIN
USDOC ITA/MAC/ANESA FOR DAVID ROTH
USDOC FOR FSC/OIO AND CLDP
USDOL FOR ILAB, NAO AND KARESH
PARIS FOR ZEYA
LONDON FOR GOLDRICH
ROME FOR ROSE
TUNIS FOR MEPI REGIONAL OFFICE

E.O. 12958: N/A
TAGS: ECON EFIN ETRD EAGR ELAB ELTN KMPI MO
SUBJECT: MOROCCO ECONOMIC HIGHLIGHTS


-- Reaping Benefits of Privatization
-- Firing Phantoms
-- 2004 Customs Receipts Up
-- Revised Growth Figures
-- Daylight Savings
-- Workday shift
-- FTA Website
-- Rabat's Rodeo Drive

--------------
Reaping Benefits of Privatization
--------------


1. Sixty-six state-owned companies were fully or partially
privatized by the GOM since 1993, earning nearly $9 billion
for the state, according to Abdelaziz Talbi, Director of
Public Enterprises at the Ministry of Finance. Morocco
ranked first in privatization receipts among Arab countries
and third among African ones, in 2004. Privatization
transactions also allowed capitalization of the Casablanca
Stock Exchange to rise from $590 million to $24.2 billion
between 1989 and 2004. The larger companies fully or partly
privatized during the period were Maroc Telecom and Rgie
des Tabacs (tobacco distribution company). From 1992 to
1996, USAID supported Morocco's privatization program
through a $25 million project. According to a recent GOM
study, privatized companies' turnover increased by 35
percent on average, dividends improved by 48 percent, and
taxes transferred to the government went up 55 percent.
Recent privatizations are "one offs," however, and the GOM
relies too heavily on privatization receipts to plug fiscal
deficits.

--------------
Firing Phantoms
--------------


2. The Moroccan Government suspended the salaries of 415
"phantom" civil servants, as part of a crack down on what is
known in Morocco as "the phantom civil servants" phenomenon.
Speaking at the House of Representatives, Minister of
Modernizing the Public Sector Mohamed Boussaid said the GOM
is studying means to fight the phenomenon of civil servants
who get paid despite consistent absence and failure to
fulfill their duties. Morocco counts about 700,000 civil
servants whose wages absorb over $7 billion a year, or about
12.5 percent of GDP. The World Bank has identified the
bloated civil service as a major cause of Morocco's chronic
budget deficits.

--------------
2004 Customs Receipts Up
--------------


3. Despite the removal of tariffs required by Morocco's
recent FTAs and liberalization efforts, Moroccan customs
revenues reached $5.16 billion in 2004, a 6 percent rise
over 2003. Customs Director General Abdellatif Zaghnoun
said the impressive results were due to a 38 percent
increase in VAT collection as well as similarly steep
increases in Customs collection of domestic consumption
taxes.

--------------
Revised Growth Figures
--------------


4. The GOM revised its 2004 GDP growth to 4.2 percent.
These final figures contrast with a provisional 3.5 percent
published early this year and compare unfavorably to the 5.5
percent growth experienced in 2003. In February, the
government statistics body said that the Moroccan economy is
expected to grow modestly in 2005, forecasting a 2.6 percent
increase of GDP. Excluding the agricultural sector, the
economy is expected to grow in 2005 at 3 percent.

--------------
Daylight savings
--------------


5. On May 23, Prime Minister Jettou announced that King
Mohammed VI had decreed that Morocco will implement daylight
savings time during summer months. Local time in Morocco
will "spring forward" one hour from GMT beginning in July.
Jettou said that economic considerations -- including
projected energy savings and increased workday overlap with
continental Europe (which during the summer has been at
least two hours ahead) led to the decision. Morocco will be
five hours ahead of EDT when the change takes place.

--------------
Continuation: Workday shift
--------------


6. Prime Minister Jettou announced May 23 that in July the
government and parastatal companies will adopt "continuous
work hours" rather than the current two shifts separated by
a long lunch hour. Civil servants will work from 8:00 AM to
4:00 PM with a short lunch pause, breaking the Mediterranean
"long lunch" tradition that resulted in four rush hours per
day and lost productivity. The government emphasized energy
savings as the main impetus for the change. The GOM has
traditionally adopted "continuation" during summer months
and during the holy Ramadan fasting month. The new work
hours are scheduled to begin on July 4.

--------------
MEPI: FTA Website Gets Over 1 Million Hits
--------------


7. On May 26, American Chamber of Commerce (AmCham)
Executive Director Carl Dawson briefed Ambassador Riley on
the impact of the U.S.-Morocco FTA Website
(www.moroccousafta.com),funded by State Department BFIF
funds and a MEPI small grant. In 2004, the website logged
over 1.25 million hits representing over 13,500 individual
users. Site visitors downloaded nearly 61,000 files,
evidence that the website is fulfilling its planned role as
the initial and primary source of information on the
agreement. Top file downloads were: the FTA summaries in
French and English, the AmCham presentation on accessing the
U.S. market, and the tariff schedule annexes. Dawson
estimated that 54 percent of users were U.S. based, 37
percent in Morocco, and 4 percent in France, but noted that
such figures underestimated potential Morocco-based hits due
to webhosting issues. Dawson also previewed the site's
future expansion (also funded by a MEPI Small Grant) to
include a moderated discussion board and an online database
for resumes and offers of employment.

--------------
Shop Till You Drop: Rabat's Rodeo Drive
--------------


8. Prince Moulay Rachid, younger brother of King Mohammed
VI, dedicated the largest trade and leisure mega-mall in
Morocco (second only to a similar one in South Africa on the
African continent). The mega-mall, which is built on 26,367
square meters and cost about $26 million, employs some 1,200
people, directly and indirectly. The Rabat complex -
designed by a Moroccan architect - includes 1,828 square-
meter ice skating rink, fast-food restaurant, bowling alleys
and a children's playground. Some 3,000 people are expected
to visit the mall daily.