FOM Newsletter February 2003
Morocco Week in Review 
February 1 2003

Morocco and the USA agreed to hold a second round of negotiations for the conclusion of a bilateral free trade accord (FTA) in March in Morocco, Ms. Cathy Novelli, chief US negotiator, announced on Friday. The two sides held this week a first round of negotiations under the chairmanship of Delegate Minister for Foreign Affairs and Cooperation, Taieb Fassi Fihri, who heads the Moroccan negotiating team, and US Trade Representative, Robert Zoellick. This week's round "was extremely productive," Novelli said at a teleconference, adding the round helped devise a working plan able to pave the way for the materialization of the FTA project before the end of the year. The US official lauded the convergence of views between the Moroccan and American delegations on several aspects of the projected accord. The US government is fully aware of Morocco's concerns regarding the country's basic economic sectors, particularly agriculture, she said, underlining "negotiations are conceived to take into account the concerns specific to Morocco." The projected Morocco-US FTA will consolidate and enlarge the already existing ties with a key partner in North Africa and the Middle East, Novelli said. Destined to promoting mutually advantageous exchanges, the FTA is also to help Morocco impose itself as a privileged center of interest for the business community, she said, renewing Washington's determination to extend necessary backing to the reforms ushered in by Morocco to spur investments.

Morocco-US FTA, Possible before Year End (Tutwiler)

RABAT, Jan. 30 - US ambassador to Morocco, Margaret Tutwiler, said on Thursday the conclusion of a free trade accord between her country and Morocco is possible this year. After a "very successful" first round of talks last week in Washington, a free trade accord is possible to be concluded this year, Ms. Tutwiler said at a luncheon debate at her residence in Rabat. The first round helped achieve progress on several issues, she said, adding the Bush administration attaches a great importance to the conclusion of the accord with Morocco.  The US diplomat paid tribute to the Moroccan negotiating team, which was the most performing team among those of all countries that already concluded a free trade accord with the USA. The conclusion of the accord will be a "first" in the history of the Moroccan-US relations, she said, adding the accord will boost trade and economic exchanges between Morocco and the USA. Several US businessmen already showed interest in investing Morocco and drawing benefit from the free trade accord, to be concluded, said the US diplomat, who described Morocco as a hub for US investments and trade exchanges with the countries of the region. Several countries in the region wanted to have a free trade accord with the US before Morocco, she said, adding Morocco was chosen because the Kingdom is in a stronger position, politically and economically.  Moroccan and U.S. negotiators agreed to meet end of March in Morocco for a second round of negotiations.  

http://www.map.co.ma/mapeng/eng.htm 

RABAT, Jan.28 - The United States is determined to foster cooperation ties binding it to Morocco in all realms, including the military and security, said here Tuesday US Assistant secretary of Defense, Peter W. Rodman. "Morocco is a traditional friend and a strategic ally for the United States," Rodman said at a press briefing, emphasizing his country's determination to consolidate its strategic partnership with the kingdom. "We are pleased to continue this partnership because we value Morocco as a friend, and its security is important to us," the US official said. "I believe we will do our best to increase military support" for friend countries, since the congress became more aware of the importance of the security of its allies after the 9/11 events, Rodman said. "We can see H.M. King Mohammed VI is moving towards greater democracy, andmaking courageous decisions in the economic field," he said. Answering a question on the amount of financial support granted to Morocco, Rodman said "I expect there will be an increase over the previous years in some categories." "We are very proud of our relationships with Morocco, and we especially appreciate that Morocco and we have been able to cooperate in a number of ways," he added. Morocco is the last leg of Rodman's one-week tour in the Maghreb region, which already took him to Tunisia and Algeria.

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Morocco and the Global Forum to Fight AIDS on Friday signed an accord whereby the Fund will assist Morocco in anti-AIDS drives. Under the convention, the Forum pledges to extend Morocco US$ 9.2 million over five years to finance awareness campaigns. The accord was initialed by Moroccan Health Minister, Biadillah Mohamed Sheikh and Global Forum Executive Advisor, Brad Hebert. The Forum announced other grant agreements to fund AIDS, tuberculosis and Malaria programs in five other countries, namely China, Honduras, Laos, Malawi and Sri Lanka, totaling US$ 108 million.

Leprosy Prevalence in Morocco Decreases

RABAT, Jan.28 - The prevalence rate of leprosy in Morocco has considerably decreased from 32 cases for 100,000 inhabitants recorded in 1990 to 1.14 in 2002 thanks to the modern and efficient poly-chemotherapy, says the health ministry.  According to data available as at December 30, 2002, the number of patients treated for leprosy stands at 340, which is a rate of 1.14 for each 100,000 inhabitants. In 2002, there were 60 new leprosy cases, including 40 men and 20 women, which is a rate of 0.20 per 100,000. The anti-leprosy program is one of the oldest ones conducted by the health ministry. Since it started in 1950, the results were encouraging. However, leprosy still prevails as a pandemic in isolated rural areas, particularly among the poorest populations.

RABAT, Jan 28 (Reuters) - Moroccan 2002 inflation exceeded government forecasts to stand at 2.8 percent, up from 0.6 percent in 2001, due mainly to a sharp rise in food prices, the state Statistics Directorate said on Tuesday. The finance ministry had forecast a 2.0 percent inflation rate for 2002. The Consumer Price Index (CPI) declined 0.2 percent in December from a month earlier, a directorate spokesman said. The CPI rose 0.9 percent in November for a year on year increase of 3.0 percent. The spokesman said the rise in food prices was mainly due to an increase in fruits and vegetables exports in 2002. The foodstuff index accounts for 40-45 percent of the total CPI weighting.  Some analysts questioned the validity of the downward revision of the 2002 inflation forecast to 2.0 percent from the original 2.5 percent made in August by the finance ministry . "The revision was probably motivated by the campaign for the September parliamentary election," a financial analyst said. The then ruling Socialist Union of Popular Forces (USFP) at the time held the Finance, Economy, Privatisation and Tourism portfolios. It kept the Finance and Privatisation portfolios after emerged as the narrow winner.  

((Reporting by Souhail Karam; rabat.newsroom@reuters.com ; +212-37 720065))

King Mohammed instructs government to study creation of family solidarity fund

Morocco's King Mohammed VI on Wednesday said he instructed the government to study the creation of a Family Solidarity Fund. "Instead of creating a allowance fund that might be misunderstood as an encouragement to what is for God the most detestable legal acts (divorce), and to family separation, We give Our instructions to Our Government to carefully study the creation of a family solidarity fund," said King Mohammed VI in a speech he gave at the opening of the judiciary year. The fund, the king said, will be financed by returns of stamps, of a symbolic value, affixed on (administrative) documents related to the personal and family statute. The Fund's disbursements will be allocated according to rigorous criteria in order to guarantee the rights of poorest mothers and protect children who risk to be abandoned following the divorce of their parents, he added. King Mohammed also said he instructed the Justice Minister, part of the king's modernist approach, to secure the opening of family-justice sections in the major tribunals and endeavor that such structures be, eventually, generalized to all the regions of the Kingdom and speed the training of specialized judges specialized in family cases. "The existing jurisdictions that take care of personal statute cases are not qualified to ensure the enforcement of Family Code, a project We are very keen on, in order to consolidate family coherence in a spirit of balance and equity," said the sovereign.

A rehabilitation and education center for Physically and mentally handicapped children, worth 110,000 Dirhams (US$ 10 million) was dedicated in Sale (near Rabat) Tuesday with a 75,000 Million Dirhams (US$ 7 million) contribution from the German embassy. The embassy extended equipment of the 150 m2 project, finalized by the association "foyer de vie." Amina Guednaoui, founder of the association, told MAP that besides rehabilitation, children in the center will be given courses including of Arabic, French, computer and mathematics. The association, set up in 2001, musters Moroccan volunteers as well as German and French nationals settled in Morocco.

Economic growth perspectives for Morocco 'encouraging': IMF RABAT, Jan 30 (AFP) - Morocco's economic outlook for 2003 is "encouraging", with growth expected to reach 5.5 percent, a percentage point higher than last year, the International Monetary Fund (IMF) said here Thursday. In a statement issued in Rabat, George Abed, director of the IMF's Middle East department, said that 5.5 percent growth could be achieved if the favourable climatic conditions seen at the beginning of the year persistm and if inflation is kept to "moderate" levels. Abed said that the IMF mission that he led on a two-week mission to Morocco had noted "renewed confidence among economic operators", and that this could result in a rise in investment in the north African country. He said, however, that "stronger growth, especially in non-agricultural sectors" was needed to bolster poverty reduction efforts and reduce unemployment.

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Alert - Crowding out COUNTRY BRIEFING FROM THE ECONOMIST INTELLIGENCE UNIT

There is a moderate risk that the budget deficit will continue to increase, leading to "crowding out" of the private sector as the government taps domestic credit sources to cover it, according to the latest update of the RiskWire model for Morocco. There is also a moderate risk that slower economic growth reduces real incomes for residents, diminishing economic opportunities for foreign investors. UPDATE The government's commitment to fiscal discipline weakened in 2002. Despite a  reduction in overall spending, its failure to privatise any public sector firm meant that the budget deficit reached an estimated 7% of GDP. The government had hoped to launch a US$500m sovereign bond earlier in the year, the proceeds from which would have gone a long way to meeting its financing needs. However, it was forced to pull this due to a lack of appetite for emerging market debt, and the deficit will have to be financed largely from the local banking sector. This is likely to mean a further crowding out of private sector borrowing and reduced opportunities for foreign firms in the private sector. We expect the government to make a more concerted effort to raise adequate privatisation revenue in 2003-04 and the deficit should narrow to under 3% of GDP. We expect a relatively strong expansion in gross fixed investment in 2003-04, partly led by the government, but also as the private sector responds to recovering tourist numbers (assuming that there is no major terrorist attack either in Morocco or in the North African region). Despite weak growth in Europe, exports performed well in 2002 and this should be replicated in 2003-04 as European demand continues to gather pace, albeit slowly. However, this will be partly offset by import growth which, although apparently weak in 2002, is expected to accelerate in line with recovering consumption and investment, as well as tariff reduction over the next two years. Given these trends, we expect real GDP growth to reach 4.2% in 2003, accelerating to 5.6% in 2004. The greatest threat to this forecast is posed by agriculture. The performance of this sector has a pronounced impact on private incomes and consumption. In years of drought, domestic demand collapses. For example, a drought in 1995 saw real GDP contract by 6.6%. Follow the link below for our updated analysis of all ten risk categories for Morocco.

RABAT, Jan. 30 - The Mohammed VI Foundation for Inmates Integration said on Thursday it will continue developing an action plan to preserve detainees' dignity and humanize jails. The plan targets the promotion of training programs to favor the social and professional integration of inmates, the Foundation said in a release. The plan also seeks to upgrade educational systems for children placed in safeguard centers, extend the reintegration center of the Okacha jail in Casablanca and build a new center for youngsters. Other actions include the alleviation of overcrowding in certain detention centers and the supply of equipment to other centers to improve living conditions in jails.

A Moroccan student spends an average eleven years to obtain a BA degree, Moroccan Higher Education and Scientific Research Minister, Khalid Alioua, said. The minister said measures are being contemplated to mend this situation and improve university studies. The minister, who was speaking at the question time at the Chamber of Advisors (upper chamber of parliament), said 45 percent of university students drop out at the first year of the four-year BA.

Moroccan minister of higher education and scientific research, Khalid Alioua, said Morocco needs to invest 6 billion DH to make up for the deficit in university residences, estimated at 100,000 beds. Speaking at the weekly question-time of the House of Representatives, the minister said the annual number of new university students will bring the total number of students to 1.5 million by 2011. In the 2001-2002 school year, some 33,510 students lived in 25 university residences nationwide, he said. Regarding scholarships, he said the ministry allocated for the 2001-2002 year a total of 528 Million DH (over US$ 50 million). The minister also recalled that as of the 1993-94 academic year, only needy students were entitled to scholarships on the basis of a study of applications by regional commissions.

Japan has donated Morocco 44 million dirhams, nearly $ 4.4 million dollars, to finance a first phase of the development of a fisheries village in northern Morocco. An accord related to the donation was initialed Wednesday in Rabat by Moroccan Fisheries Minister, Tayeb Rhafes and Japan's ambassador to Morocco, Yoshitaka Kawamura. The project seeks to help fisherman in the region operate in better conditions and to endow them with infrastructure necessary for a sound marketing of catches. The project, to be completed in 2004, is part of Morocco's efforts to develop traditional fisheries.

The value of Morocco's coastal catches reached 3.2 billion Dirhams (US$ 304 million) by the end of November 2002, which is a 43% rise in comparison with 2001, the directorate of general economic policy said in its latest newsletter. Unlike the catches value, the volume of coast catches decreased by 11.8%, the source added. The value of shell fish, mollusks and shell sales abroad increased by 8.6% after a 17.9% decrease in 2001, while sales of canned fish gained 6.8% in value, and decreased by 4.4% in volume. The direction of general economic policy said the evolution is due to more important orders from the European Union, and the increase in the Euro value.

OULAD TAYMA, Jan.28 - H.M. King Mohammed VI, accompanied by H.R.H. Prince Moulay Rachid, on Tuesday, dedicated the first section of Agadir-Taroudant (southwestern Morocco) speedway and launched construction works for a second stretch of the 65 km-long speedway. The project is implemented by the ministry of equipment and transport in partnership with the Council of Souss-Massa-Draa region. The first section of the speedway linking Abderrahim Bouabid avenue to Agadir's Al Massira Airport necessitated US$ 2.3 million which was financed by the Council of Souss-Massa-Draa. The project will also link Oulad Tayma, Agadir's hinterland, to the airport by way of a 23 km-long speedway. About US$ 6 million was earmarked for the implementation of this project, including two millions contributed by the ministry of equipment and transport, while the remaining four are paid out by the region's council. The cost of the second section of the speedway is assessed at about US$ 6 million, co-financed by the ministry of equipment and transport (US$ 1.8 million) and the region's council. Construction works are scheduled to finish by May 2004.

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