DEAR MOROCCAN EXPATRIATES, PLEASE SEND MONEY

1. (SBU) Summary: The global economic contraction is having a
direct effect on Morocco's economy through falling remittances.
Based on discussions with government interlocutors and the banking
community, the outlook for inflows of expatriate funds into Morocco
is increasingly somber. Morocco's expatriate laborers provide the
country with its largest source of foreign capital, far more than
foreign direct investment inflows and the country's tourist
industry. The Ministry of Finance reported recently that
remittances will drop 15 percent from USD 6.8 billion in 2008 to an
estimated USD 5.5 billion in 2009. The government continues to
closely follow the inflow of expatriate funds and recently announced
a series of new measures aimed at boosting remittances from
Morocco's approximately three million expatriate laborers. End
Summary.



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Moroccans Living Abroad


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2. (SBU) According to the Council of the Moroccan Community Abroad
(CCME), a government body representing the country's expatriate
laborers, more than 3 million Moroccans currently live abroad with
an estimated 1.6 million in France and 700,000 in Spain, the two
principal sources of remittances for Morocco. CCME's director Driss
El Yazami told EconOff there has been a geographical broadening of
emigration in the last couple of years, with a particular emphasis
on the United States, home to about 100,000 Moroccans. El Yazami
also noted that single women are increasingly emigrating from
Morocco and now make up more than 50 percent of Moroccans living
abroad, known locally as MREs (Marocains Residant a l'Etranger).



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MREs: Morocco's Largest Source of Foreign Capital


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3. (SBU) Remittances contribute to Morocco's economy on both a
micro and macro level. Nearly 10 percent of Morocco's GDP comes
from remittances. In fact, Morocco's expatriate laborers provide
the country with its largest source of foreign capital, far more
than foreign direct investment inflows and the country's tourist
industry. In Morocco's northeastern Oriental region, historically
the origin of the largest number of MREs, remittances make up such a
large source of cash that the average bank savings account is nearly
ten times the national average. Remittances have also helped offset
the country's trade deficit in recent years and have kept Morocco's
currency, the Dirham, relatively stable.



4. (SBU) At the micro level, remittances are primarily used to
support household consumption. A recent World Bank report details
the role of remittances in the reduction of poverty in Morocco,
discussing their use for household expenditures on education,
healthcare, and small-scale investment in local businesses.
Morocco's expatriate laborers are also the largest overseas
contributors to the Casablanca Stock Exchange, accounting for 71.5
percent of foreign investments in the Exchange.



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The Crisis Hits Home


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5. (SBU) The reprecussions of the slowdown of remittance flows on
overall economic activity and government finances are becoming
evident. Analysts such as Abderrahim Bouazza, Head of Banking
Supervision at the Bank Al-Maghrib (Morocco's central bank), concede
that the falling remittances will increase the strain on Morocco's
foreign exchange reserves and add to the current account deficit.
According to estimates from the Ministry of Economy and Finance,
remittances will fall 15 percent from USD 6.8 billion in 2008 to an
estimated USD 5.5 billion in 2009. This decline in remittances is
equivalent to 1.6 percent of the Kingdom's USD 90 billion GDP.
Nabila Freidji, a Western Union Executive, predicted to EconOff that
remittances would not begin climbing until the third quarter of


2010.



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Government Efforts to Boost Remittances


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6. (SBU) Mindful of remittances' critical role in the national
economy, Morocco's "Strategic Watch Committee," established to keep
track of and propose remedies to the impact of the global economic
crisis, recently announced a series of new measures aimed at
propping up declining transfers from MREs. These include lowered
fees on money transfers until the end of 2009 and state-guaranteed
funds to help low-income expatriates acquire housing units. In
addition, the government has created a fund to encourage Moroccans
to invest in their home country, by which the state would invest 10
percent of the total costs of an investment project, leaving 25
percent to be funded by the expatriates themselves and the remaining
65 percent to be financed by banks.



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Comment


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7. (SBU) The Moroccan "exception" to the global economic crisis
(Reftel) is under strain, as the downturn in key regions like Europe
undermines some of the country's most important contributors to GDP
growth and its balance of payments. Satisfactory economic growth
this year appears certain thanks to a likely record agricultural
harvest, but a continuation into next year of the current anemic
level of remittances would substantially increase the likelihood of
Morocco dipping into recession.

MILLARD