Identifier
Created
Classification
Origin
06RABAT2170
2006-11-24 16:55:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Rabat
Cable title:
MOROCCO MACROECONOMIC UPDATE AND ECONOMIC
how-toVZCZCXRO7992 RR RUEHTRO DE RUEHRB #2170/01 3281655 ZNR UUUUU ZZH R 241655Z NOV 06 FM AMEMBASSY RABAT TO RUEHC/SECSTATE WASHDC 5259 INFO RUEHAS/AMEMBASSY ALGIERS 4210 RUEHMD/AMEMBASSY MADRID 5606 RUEHNK/AMEMBASSY NOUAKCHOTT 3355 RUEHFR/AMEMBASSY PARIS 4442 RUEHTRO/AMEMBASSY TRIPOLI 0112 RUEHTU/AMEMBASSY TUNIS 9113 RUEHCL/AMCONSUL CASABLANCA 2384 RUCPDOC/DEPT OF COMMERCE WASHDC RUEHRC/DEPT OF AGRICULTURE WASHDC
UNCLAS SECTION 01 OF 03 RABAT 002170
SIPDIS
SENSITIVE
SIPDIS
STATE FOR NEA/MAG, STATE PASS USTR (BELL),USPTO (ADLIN AND
ADAMS),USDOC FOR ITA/MAC/ONE (ROTH),ADVOCACY CTR (JAMES)
AND CLDP (TEJTEL)
E.O. 12958: N/A
TAGS: EAGR EAIR ECON EIND ELAB ETRD KTEX MO
SUBJECT: MOROCCO MACROECONOMIC UPDATE AND ECONOMIC
HIGHLIGHTS; NOVEMBER 2007
REF: RABAT 02071
UNCLAS SECTION 01 OF 03 RABAT 002170
SIPDIS
SENSITIVE
SIPDIS
STATE FOR NEA/MAG, STATE PASS USTR (BELL),USPTO (ADLIN AND
ADAMS),USDOC FOR ITA/MAC/ONE (ROTH),ADVOCACY CTR (JAMES)
AND CLDP (TEJTEL)
E.O. 12958: N/A
TAGS: EAGR EAIR ECON EIND ELAB ETRD KTEX MO
SUBJECT: MOROCCO MACROECONOMIC UPDATE AND ECONOMIC
HIGHLIGHTS; NOVEMBER 2007
REF: RABAT 02071
1. (U) This message provides an update on Morocco's
macroeconomic situation, together with the following other
economic highlights:
A. Moroccan Ports In Compliance With International Security
Standards
B. FTA Wheat Quotas Unfulfilled
C. Parliament Debates Anti-Money Laundering Law
D. RyanAir Postpones New Service
E. Internet ADSL Subscribers Increase 294 Percent From 2005
F. Moroccan Professors Upset Over Work Conditions
G. U.S. and Morocco Sign Environmental and Science Agreements
--------------
Morocco Macroeconomic Update
--------------
2. (U) Economy Rebounds: As part of its November 20 Survey,
the International Monetary Fund praised Moroccan
macroeconomic conditions, reform efforts, and fiscal policy.
Noting a bumper wheat crop, together with strong activity in
services and construction, the IMF projected real GDP growth
of 7.3 percent in 2006. The IMF also noted the fiscal
deficit would be close to the 2006 budget target of 4.1
percent, down from 5.9 percent in 2005. Although the IMF
characterized the inflation rate as low, the Central Bank
reported inflation reached 3 percent in the first eight
months of 2006, up from an average of 1.7 percent in the past
five years. The Central Bank attributed the increase to
positive factors such as economic growth and an increase in
money supply from tourism and remittances.
3. (U) Exports Increase: The Foreign Exchange Office (Office
des Changes) reported Moroccan exports exceeded USD 9 billion
in the first nine months of 2006, up 14 percent from the same
period in 2005. Semi-finished products increased 28.6
percent, commodities were up 11.2 percent, and food products
increased 3.6 percent. U.S. Department of Commerce trade
figures show Moroccan exports to the U.S. rose 5 percent from
2005. Despite the rise in exports, Moroccan imports nearly
doubled the value of imports, with the trade deficit growing
by 9.5 percent from 2005, primarily due to increased
petroleum costs.
4. (U) Unemployment Drops: The High Planning Commission
reports unemployment dropped slightly in the third quarter of
2006 to 10 percent. Compared to 2005, urban unemployment
dropped 1.8 percent to 15.8 percent, while rural unemployment
remained stagnant at 3.9 percent. This decrease in
unemployment was achieved as the working population increased
by 4.7 percent to 11.4 million workers. The Minister of
Employment, Mustafa Mansouri said 272,000 new jobs were
created between 2003 and 2005, compared to 147,000 between
2000 and 2003.
5. (U) One of the principal sectors responsible for the
decrease in unemployment was tourism, which experienced a
25.8 percent increase in revenue in the first nine months of
2006, in comparison to the same period in 2005. According to
the Ministry of Tourism, revenues reached USD 4.5 billion in
the first nine months of 2006, and are expected to exceed USD
6.5 billion by year's end. Tourist numbers increased 9
percent and are expected to reach 6.5 million by year's end,
up from 5.8 million in 2005. Morocco hopes to encourage 10
million tourists by 2010, but according to Tourism Minister
Adil Douiri, hotel rooms are not being built fast enough.
Roughly 10,000 extra hotel beds were added in 2006, but
15-17,000 are required to support the 10 million goal.
6. (U) Record Level of Foreign Investment: Tourism Minister,
Adil Douiri said foreign investments are expected to exceed
USD 3.86 billion in 2006, surpassing 2005's record of USD 3.2
billion. Douiri attributed the influx of foreign investment
to GOM policies, particularly in tourism. The Director of
Foreign Investments, Hassan Bernoussi, added that foreign
investment by Gulf States had reached USD 23.2 billion,
RABAT 00002170 002 OF 003
primarily in real estate, urban transportation
infrastructure, water management, and tourism.
7. (U) One consequence of increased foreign investment has
been a dramatic increase in real estate prices. According to
Mohamed Adil Bouhaja, President of the Association of Estate
Agents in Marrakech, owning a second home in Morocco has
become fashionable for Europeans, with demand sharply up in
all markets and price ranges. An apartment purchased two
years ago in Marrakech for 300,000 dirhams, for example, can
now be sold for 800,000 dirhams. One prominent real estate
expert predicts that prices will continue to increase until
they approach Spanish levels.
8. (U) Another indicator of foreign investment has been the
Casablanca Stock Exchange. Despite some analysts' prediction
of a sell-off and profit-taking, the Casablanca Stock
Exchange continues to outperform all other Arab markets, up
over 60 percent in 2006. In 2005, the Moroccan All Shares
Index (MASI) achieved a 146 percent return. Analysts points
to the record level of foreign investment, large and popular
public offerings (utility privatization) by the government,
and a flourishing economy as reasons for the market's
performance.
--------------
Moroccan Ports ISPS Compliant
--------------
9. (U) In September, a U.S. Coast Guard International Port
Security (IPS) team found Morocco substantially compliant
with the International Port Facility Security (ISPS) Code.
The four-member USCG team met with senior GOM maritime
transport officials and visited five Moroccan ports. They
found the National Port Security Committee dedicated to
improving port security, adequate access and perimeter
security measures at the ports visited, and impressive
cooperation at the local level.
--------------
Unfulfilled Wheat Quotas
--------------
10. (SBU) Leading Moroccan wheat importers and millers sought
USG support in pressing Morocco to lower high import duties
in a meeting with Ambassador Riley last week. They cited
high duties of 130 percent as the principal cause of their
inability to import U.S. wheat. Auctions held by the
National Cereals' Office (ONICL) earlier this month brought
no bids. Importers claim the message from ONICL is clear.
"We are holding the auctions to fulfill our obligations under
the FTA, but we are not going to import U.S. wheat." To
date, less than a tenth of the quota for bread wheat and less
than a quarter of that for durum wheat has been filled. The
millers argue that while it was the intent of the FTA to
liberalize trade, in practice the TRQ auction system has
provided an additional tool for the GOM to manage wheat trade.
--------------
Anti-Money Laundering Bill Reaches Parliament
--------------
14. (U) Morocco's long-awaited Anti-Money Laundering (AML)
legislation was formally introduced for debate in Parliament
on November 21. The Ministerial Council, presided over by
the King, had previously approved and forwarded the
legislation to Parliament in July. The robust legislation
draws largely from recommendations made by the Organization
for Economic Cooperation and Development's (OECD) Financial
Task Force (FATF),and will permit the Central Bank to
monitor, investigate, and prosecute all suspect financial
activities. The law requires the reporting of suspicious
financial transactions by all responsible parties, public and
private, who in the exercise of their work, carry out or
advise on the movement of funds possibly related to drug
trafficking, human trafficking, arms trafficking, corruption,
terrorism, tax evasion, or forgery. Enactment of the AML law
is a key step in the Moroccan anti-money laundering campaign
RABAT 00002170 003 OF 003
that includes plans to create a centralized Financial
Intelligence Unit (FIU). Both the upper and lower chambers
of Parliament will have the opportunity to discuss the
legislation before voting on it. Within thirty days of
Parliamentary passage, the legislation will then be sent to
the Royal Palace to receive the King's final seal. Only then
can the legislation be published in the official gazette and
become law. Given the time required to complete these next
steps, we expect implementation of AML no earlier than spring
2007.
--------------
RyanAir Postpones Service
--------------
15. (SBU) RyanAir, Europe's premier low-cost airline,
announced it had been forced to indefinitely postpone the
launch of new routes from France and Germany to Morocco.
Although Morocco and the EU signed an Open Sky treaty in
October and RyanAir had planned to launch greatly expanded
service from France and Germany in December, the carrier was
forced to indefinitely postpone its expanded service due to a
ratification issue among EU member countries. In open source
reporting, French transport officials were singled-out for
their obstruction of the new accord, citing the need for
ratification among all the EU member countries before they
would authorize the new routes. In a press release, RyanAir
noted the process could take up to 18 months. Comment:
Morocco was the largest French passenger growth market in
2006, up more than 26 percent from 2005. Many observers
interpret France's tough stance as an attempt to protect Air
France's dominant position in the market. End Comment.
--------------
ADSL Internet Usage Soars
--------------
16. (U) According to a new report released by Arab Advisors
Group, Morocco's ADSL market grew by 97 percent during the
second quarter of 2006, and 294 percent in the past year. By
contrast, total Internet access grew by only 8.2 percent in
the second quarter. The large growth in the ADSL market
reflects growing demand and sophistication by the consumer,
according to the study. Nonetheless, Internet access is
still used by a small minority of Moroccans (approximately
1.12 percent),which is comparable to many sub-Saharan
states. The Group predicts Morocco's Internet growth to be
29.8 percent between 2006-2010.
-------------- --------------
U.S. - Morocco Sign Environmental and Science Agreements
-------------- --------------
17. (U) In two separate signing ceremonies, Assistant
Secretary of State for Oceans, Environment and Science,
SIPDIS
Claudia McMurray, signed a U.S.- Morocco Environmental
Cooperation Plan of Action and a Science and Technology
Agreement in Rabat, on November 14. The Environmental
Cooperation Plan of Action was developed pursuant to a U.S. -
Morocco Joint Statement on Environmental Cooperation, which
was negotiated in conjunction with the FTA. A number of
cooperative activities are in progress, or have been
completed, including training programs in the use of
Environmental Impact Assessments and environmental
decision-making. The U.S. - Morocco Science and Technology
Agreement provides the framework for collaboration on a broad
array of science issues and parallels similar agreements with
Algeria and Tunisia.
******************************************
Visit Embassy Rabat's Classified Website;
http://www.state.sgov.gov/p/nea/rabat
******************************************
Riley
SIPDIS
SENSITIVE
SIPDIS
STATE FOR NEA/MAG, STATE PASS USTR (BELL),USPTO (ADLIN AND
ADAMS),USDOC FOR ITA/MAC/ONE (ROTH),ADVOCACY CTR (JAMES)
AND CLDP (TEJTEL)
E.O. 12958: N/A
TAGS: EAGR EAIR ECON EIND ELAB ETRD KTEX MO
SUBJECT: MOROCCO MACROECONOMIC UPDATE AND ECONOMIC
HIGHLIGHTS; NOVEMBER 2007
REF: RABAT 02071
1. (U) This message provides an update on Morocco's
macroeconomic situation, together with the following other
economic highlights:
A. Moroccan Ports In Compliance With International Security
Standards
B. FTA Wheat Quotas Unfulfilled
C. Parliament Debates Anti-Money Laundering Law
D. RyanAir Postpones New Service
E. Internet ADSL Subscribers Increase 294 Percent From 2005
F. Moroccan Professors Upset Over Work Conditions
G. U.S. and Morocco Sign Environmental and Science Agreements
--------------
Morocco Macroeconomic Update
--------------
2. (U) Economy Rebounds: As part of its November 20 Survey,
the International Monetary Fund praised Moroccan
macroeconomic conditions, reform efforts, and fiscal policy.
Noting a bumper wheat crop, together with strong activity in
services and construction, the IMF projected real GDP growth
of 7.3 percent in 2006. The IMF also noted the fiscal
deficit would be close to the 2006 budget target of 4.1
percent, down from 5.9 percent in 2005. Although the IMF
characterized the inflation rate as low, the Central Bank
reported inflation reached 3 percent in the first eight
months of 2006, up from an average of 1.7 percent in the past
five years. The Central Bank attributed the increase to
positive factors such as economic growth and an increase in
money supply from tourism and remittances.
3. (U) Exports Increase: The Foreign Exchange Office (Office
des Changes) reported Moroccan exports exceeded USD 9 billion
in the first nine months of 2006, up 14 percent from the same
period in 2005. Semi-finished products increased 28.6
percent, commodities were up 11.2 percent, and food products
increased 3.6 percent. U.S. Department of Commerce trade
figures show Moroccan exports to the U.S. rose 5 percent from
2005. Despite the rise in exports, Moroccan imports nearly
doubled the value of imports, with the trade deficit growing
by 9.5 percent from 2005, primarily due to increased
petroleum costs.
4. (U) Unemployment Drops: The High Planning Commission
reports unemployment dropped slightly in the third quarter of
2006 to 10 percent. Compared to 2005, urban unemployment
dropped 1.8 percent to 15.8 percent, while rural unemployment
remained stagnant at 3.9 percent. This decrease in
unemployment was achieved as the working population increased
by 4.7 percent to 11.4 million workers. The Minister of
Employment, Mustafa Mansouri said 272,000 new jobs were
created between 2003 and 2005, compared to 147,000 between
2000 and 2003.
5. (U) One of the principal sectors responsible for the
decrease in unemployment was tourism, which experienced a
25.8 percent increase in revenue in the first nine months of
2006, in comparison to the same period in 2005. According to
the Ministry of Tourism, revenues reached USD 4.5 billion in
the first nine months of 2006, and are expected to exceed USD
6.5 billion by year's end. Tourist numbers increased 9
percent and are expected to reach 6.5 million by year's end,
up from 5.8 million in 2005. Morocco hopes to encourage 10
million tourists by 2010, but according to Tourism Minister
Adil Douiri, hotel rooms are not being built fast enough.
Roughly 10,000 extra hotel beds were added in 2006, but
15-17,000 are required to support the 10 million goal.
6. (U) Record Level of Foreign Investment: Tourism Minister,
Adil Douiri said foreign investments are expected to exceed
USD 3.86 billion in 2006, surpassing 2005's record of USD 3.2
billion. Douiri attributed the influx of foreign investment
to GOM policies, particularly in tourism. The Director of
Foreign Investments, Hassan Bernoussi, added that foreign
investment by Gulf States had reached USD 23.2 billion,
RABAT 00002170 002 OF 003
primarily in real estate, urban transportation
infrastructure, water management, and tourism.
7. (U) One consequence of increased foreign investment has
been a dramatic increase in real estate prices. According to
Mohamed Adil Bouhaja, President of the Association of Estate
Agents in Marrakech, owning a second home in Morocco has
become fashionable for Europeans, with demand sharply up in
all markets and price ranges. An apartment purchased two
years ago in Marrakech for 300,000 dirhams, for example, can
now be sold for 800,000 dirhams. One prominent real estate
expert predicts that prices will continue to increase until
they approach Spanish levels.
8. (U) Another indicator of foreign investment has been the
Casablanca Stock Exchange. Despite some analysts' prediction
of a sell-off and profit-taking, the Casablanca Stock
Exchange continues to outperform all other Arab markets, up
over 60 percent in 2006. In 2005, the Moroccan All Shares
Index (MASI) achieved a 146 percent return. Analysts points
to the record level of foreign investment, large and popular
public offerings (utility privatization) by the government,
and a flourishing economy as reasons for the market's
performance.
--------------
Moroccan Ports ISPS Compliant
--------------
9. (U) In September, a U.S. Coast Guard International Port
Security (IPS) team found Morocco substantially compliant
with the International Port Facility Security (ISPS) Code.
The four-member USCG team met with senior GOM maritime
transport officials and visited five Moroccan ports. They
found the National Port Security Committee dedicated to
improving port security, adequate access and perimeter
security measures at the ports visited, and impressive
cooperation at the local level.
--------------
Unfulfilled Wheat Quotas
--------------
10. (SBU) Leading Moroccan wheat importers and millers sought
USG support in pressing Morocco to lower high import duties
in a meeting with Ambassador Riley last week. They cited
high duties of 130 percent as the principal cause of their
inability to import U.S. wheat. Auctions held by the
National Cereals' Office (ONICL) earlier this month brought
no bids. Importers claim the message from ONICL is clear.
"We are holding the auctions to fulfill our obligations under
the FTA, but we are not going to import U.S. wheat." To
date, less than a tenth of the quota for bread wheat and less
than a quarter of that for durum wheat has been filled. The
millers argue that while it was the intent of the FTA to
liberalize trade, in practice the TRQ auction system has
provided an additional tool for the GOM to manage wheat trade.
--------------
Anti-Money Laundering Bill Reaches Parliament
--------------
14. (U) Morocco's long-awaited Anti-Money Laundering (AML)
legislation was formally introduced for debate in Parliament
on November 21. The Ministerial Council, presided over by
the King, had previously approved and forwarded the
legislation to Parliament in July. The robust legislation
draws largely from recommendations made by the Organization
for Economic Cooperation and Development's (OECD) Financial
Task Force (FATF),and will permit the Central Bank to
monitor, investigate, and prosecute all suspect financial
activities. The law requires the reporting of suspicious
financial transactions by all responsible parties, public and
private, who in the exercise of their work, carry out or
advise on the movement of funds possibly related to drug
trafficking, human trafficking, arms trafficking, corruption,
terrorism, tax evasion, or forgery. Enactment of the AML law
is a key step in the Moroccan anti-money laundering campaign
RABAT 00002170 003 OF 003
that includes plans to create a centralized Financial
Intelligence Unit (FIU). Both the upper and lower chambers
of Parliament will have the opportunity to discuss the
legislation before voting on it. Within thirty days of
Parliamentary passage, the legislation will then be sent to
the Royal Palace to receive the King's final seal. Only then
can the legislation be published in the official gazette and
become law. Given the time required to complete these next
steps, we expect implementation of AML no earlier than spring
2007.
--------------
RyanAir Postpones Service
--------------
15. (SBU) RyanAir, Europe's premier low-cost airline,
announced it had been forced to indefinitely postpone the
launch of new routes from France and Germany to Morocco.
Although Morocco and the EU signed an Open Sky treaty in
October and RyanAir had planned to launch greatly expanded
service from France and Germany in December, the carrier was
forced to indefinitely postpone its expanded service due to a
ratification issue among EU member countries. In open source
reporting, French transport officials were singled-out for
their obstruction of the new accord, citing the need for
ratification among all the EU member countries before they
would authorize the new routes. In a press release, RyanAir
noted the process could take up to 18 months. Comment:
Morocco was the largest French passenger growth market in
2006, up more than 26 percent from 2005. Many observers
interpret France's tough stance as an attempt to protect Air
France's dominant position in the market. End Comment.
--------------
ADSL Internet Usage Soars
--------------
16. (U) According to a new report released by Arab Advisors
Group, Morocco's ADSL market grew by 97 percent during the
second quarter of 2006, and 294 percent in the past year. By
contrast, total Internet access grew by only 8.2 percent in
the second quarter. The large growth in the ADSL market
reflects growing demand and sophistication by the consumer,
according to the study. Nonetheless, Internet access is
still used by a small minority of Moroccans (approximately
1.12 percent),which is comparable to many sub-Saharan
states. The Group predicts Morocco's Internet growth to be
29.8 percent between 2006-2010.
-------------- --------------
U.S. - Morocco Sign Environmental and Science Agreements
-------------- --------------
17. (U) In two separate signing ceremonies, Assistant
Secretary of State for Oceans, Environment and Science,
SIPDIS
Claudia McMurray, signed a U.S.- Morocco Environmental
Cooperation Plan of Action and a Science and Technology
Agreement in Rabat, on November 14. The Environmental
Cooperation Plan of Action was developed pursuant to a U.S. -
Morocco Joint Statement on Environmental Cooperation, which
was negotiated in conjunction with the FTA. A number of
cooperative activities are in progress, or have been
completed, including training programs in the use of
Environmental Impact Assessments and environmental
decision-making. The U.S. - Morocco Science and Technology
Agreement provides the framework for collaboration on a broad
array of science issues and parallels similar agreements with
Algeria and Tunisia.
******************************************
Visit Embassy Rabat's Classified Website;
http://www.state.sgov.gov/p/nea/rabat
******************************************
Riley