Morocco

Politics:

• Analysis

  Morocco politics: Quick View - Islamist leader's death marked by officials'

  Event

  Sheikh Abdessalam Yassine, the leader of Morocco's largest Islamist movement, al-Adl wal-Ihsane (Justice and Charity), which he founded in 1987, died on December 13th.

  Analysis

  Tens of thousands gathered in Rabat for his funeral on December 14th, but the Islamist prime minister, Abdelilah Benkirane, did not attend. The enormous turnout strongly contrasted with officials' silence and the absence of Mr Benkirane, who had visited the home of the deceased and said that he would attend the funeral. His absence was not a surprise given the controversial nature of al-Adl wal-Ihsane and Mr Yassine's unhidden hostility towards the regime.

  In 1974 Mr Yassine came to prominence after he sent an open and very critical letter to King Hassan II, urging him to choose between "Islam or the deluge". This was considered a rare and a punishable act of defiance, and he was imprisoned without charge for three and a half years. He later founded al-Adl wal-Ihsane, which became the country's largest Islamist group but was denied a secure legal status as a political party. Formally banned, it has generally been tolerated, but its members are subject to harassment by security forces. Indeed, Mr Yassine spent almost a decade under house arrest. Active in educational and welfare work, al-Adl wal-Ihsane has created hundreds of local branches while remaining consistently critical of the regime. It advocates the establishment of an Islamist state but rejects violence to achieve it. This pacifist approach, which stems from influence on Mr Yassine of Sufi mysticism, has distanced it from other Islamist groups in the region.

  Mr Yassine was burdened by ill health in recent years, but his death will leave a power vacuum as there is no clear successor. Nadia Yassine, the daughter of the deceased, who has assumed a prominent role within al-Adl wal-Ihsane in recent years, was educated in France. She has led the group to the streets to take part in the Moroccan version of the Arab Spring, the so-called February 20th movement, but later quit, considering its demands too limited. However, Ms Yassine is unlikely to succeed her father as head of the group; given the responsibility of religious leadership that it entails, the position will probably go to a man.

  December 17, 2012

• Background

  Morocco: Political forces at a glance

  Political outlook: Political forces at a glance

  Present government: Under the new constitution which took effect in July 2011, Morocco remains a constitutional monarchy. Despite some modest reforms, power remains highly concentrated in the hands of the king, Mohammed VI. The bicameral parliament has limited power: the king can dissolve it, dismiss the government and rule by decree. The king has a dual role as temporal leader and spiritual guide (amir al-muminin, or commander of the faithful) which grants him an "inviolable" status. The constitution grants the king the right to appoint the head of government (prime minister) from within the winning party, as well as other ministers and secretaries of state (members of government), albeit on the recommendation of the prime minister. The king presides over the cabinet and sets the overall direction of policy through public speeches, in which he variously encourages and berates the government. He appoints the head of the central bank, ambassadors, regional governors (walis) and the heads of key public enterprises, and ratifies treaties. He is the guarantor of the independence of the judiciary under the new constitution and approves the appointment of judges. He is also supreme commander of the armed forces.

  Parliamentary forces: With power so heavily concentrated in the hands of the royal court, no political party is particularly dominant. Politicians frequently switch parties for their own gain. The low-threshold proportional representation system tends to result in a large number of parties in parliament, with none having a strong support base, and no one party able to win a majority of the 395 seats in the House of Representatives. The 270-member upper Chamber of Advisers is indirectly elected from various interest groups and can initiate legislation, leading to some duplication of functions with the lower house. This is unlikely to change over the forecast period, as the resulting fragmentation of parliament is ultimately in the monarchy's interest.

  Next elections: The next parliamentary election is due in November 2016, five years following the early elections in November 2011.

  Parliamentary election results
  	Seats won	Seats won
  Party	2007	2011	% of total	Government/opposition
  Parti Istiqlal (PI—conservative nationalist)	52	60	15.2	Government
  Parti de la justice et du développement (PJD—moderate Islamist)a	46	107	27.1	Government
  Mouvement populaire (MP—centre-Berberist)	41	32	8.1	Government
  Rassemblement national des indépendants (RNI—centrist)	39	52	13.2	Opposition
  Union socialiste des forces populaires (USFP—socialist)	38	39	9.9	Opposition
  Union constitutionnelle (UC—liberal conservative)	27	23	5.8	Opposition
  Parti du progrès et du socialisme (PPS—ex-communist)	17	18	4.6	Government
  Parti authenticité et modernitéb	–	47	11.9	–
  Total for ruling coalitionb	146	217	54.9	–
  Total (including ten others)b	325	395	100	–
  a Heads the current coalition government. b A coalition formed in 2008 from existing smaller parties in parliament, which controlled 46 seats in the previous parliament.
  Sources: Maghreb Arab Press; press reports.

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  June 27, 2012

• Structure

  Morocco: Political structure

  Official name

  Kingdom of Morocco

  Form of state

  Constitutional monarchy

  Legal system

  Based on French and Islamic law and French legal procedure. A new constitution came into force on July 1st 2011 but will require some organic laws to be passed for some clauses to become operational

  National legislature

  Bicameral system, consisting of a directly elected 395-seat lower House of Representatives and a 270-seat upper Chamber of Advisers indirectly elected by an electoral college

  National elections

  Last elections: June 2009 (municipal); November 2011 (House of Representatives). Next elections: 2012 (Chamber of Advisers) November 2016 (House of Representatives)

  Head of state

  King Mohammed VI

  Administration

  There are 39 provinces and eight urban prefectures; real provincial power is in the hands of governors appointed by the Ministry of the Interior

  Executive

  The king is required to ask the leader of the largest party in the House of Representatives to form a government and choose a Council of Ministers, which is then approved by the king; a new prime minister was appointed in November 2011. A new coalition cabinet was formed in January 2012

  Main political parties

  Loyalist: Rassemblement national des indépendants; Union constitutionnelle; Mouvement populaire (MP); Alliance nationale; Parti de l'authenticité et de la modernité. Left and centre-left: Parti de l'Istiqlal; Union socialiste des forces populaires; Parti du progrès et du socialisme (PPS); Gauche socialiste unifiée. Islamist: Parti de la justice et du développement (PJD). The country's largest Islamist movement is the banned al-Adl wal-Ihsane (Justice and Charity)

  Prime minister: Abdelilah Benkirane (PJD)

  Minister of state: Abdellah Baha (PJD)

  Secretary-general of the government: Driss Dahak (royal appt)

  Key ministers

  Agriculture & fisheries: Aziz Akhenouch (independent)

  Communication & government spokesperson: Mustapha el-Khalfi (PJD)

  Culture: Mohamed Amine Sbihi (PPS)

  Defence: Abdellatif Loudiyi (royal appt)

  Education & higher education: Mohammed el-Ouafa (Istiqlal)

  Endowments & Islamic affairs: Ahmed Toufik (royal appt)

  Energy, mines, water & environment: Fouad Douiri (Istiqlal)

  Equipment & transport: Aziz Rabbah (PJD)

  Finance & economy: Nizar Baraka (Istiqlal)

  Foreign affairs & co-operation: Saad-Eddine el-Othmani (PJD)

  Health El: Hossein el-Ouardi (PPS)

  Industry, trade & new technologies: Abdelkader Aamara (PJD)

  Interior: Mohand Laenser (MP)

  Justice: Mustafa Ramid (PJD)

  Labour: Abdelouahed Souhail (PPS)

  Social development, family & women: Bassima Hakkaoui (PJD)

  Tourism: Lahcen Haddad (MP)

  Youth & sports: Mohammed Ouzzine (MP)

  Central bank governor

  Abdellatif Jouahri

  December 07, 2012

• Outlook

  Morocco: Key developments

  Outlook for 2013-17

  • The political situation will be broadly stable in 2013-17, under the rule of the king, Mohammed VI. Protests will continue, but they will not pose a threat to the regime, which will respond with further modest political reforms.
  • The government will remain weak, despite an enhancement of its powers under the new constitution, which was approved in 2011, and there will continue to be disaffection with formal politics.
  • Abdelilah Benkirane, the leader of the Islamist Parti de la justice et du développement and prime minister since late 2011, will struggle to balance the demands of his secular coalition partners with those of his constituents.
  • The contested territory of Western Sahara will remain a major foreign policy issue. Ties with the Gulf Arab monarchies will strengthen.
  • The fiscal account will remain in deficit in 2013-17 as the government spends heavily on investment programmes, on subsidies and on raising public-sector pay in an effort to boost job growth and reduce political discontent.
  • Reflecting the poor outlook for the European economy, Morocco's main export market, we have revised down our forecast for real GDP growth in 2013 to 3.3%. However, in 2014-17 growth will rise to an average of 4.8%.
  • The current-account will remain in deficit in 2013-17, but rising inflows from remittances and services will help to bring down the shortfall, especially after 2014.

  Review

  • The draft budget for 2013, which assumes real GDP growth of 4.5%, aims for a reduction in the fiscal deficit to 4.8% of GDP, from a projected 5%-6% of GDP in 2012. However, the draft has been criticised for failing to rein in spending.
  • Subsidy spending has continued to increase, mainly as a result of high energy prices, reaching 130% of the amount budgeted for the whole of this year in January-October.
  • The government is planning to create a "social cohesion fund". Although it is not clear exactly how the fund will be deployed, the goal is to enhance social solidarity whilst supporting small- and medium-sized enterprises.
  • According to data released by the Haut commissariat au plan, the unemployment rate rose to 9.4% in the third quarter of 2012, up from 9.1% in the corresponding period of 2011.
  • Paradoxically, in a country that suffers from shortages of skilled labour, graduate unemployment remains nearly double the overall unemployment average (17.2% at the national level, rising to 18.8% in urban areas).

  December 07, 2012

Economy:

• Background

  Morocco: Country fact sheet

  Fact sheet

  Annual data	2011a	Historical averages (%)	2007-11
  Population (m)	32.3	Population growth	1.0
  GDP (US$ bn; market exchange rate)	99.4	Real GDP growth	4.3
  GDP (US$ bn; purchasing power parity)	163.3b	Real domestic demand growth	5.2
  GDP per head (US$; market exchange rate)	3,081	Inflation	1.7
  GDP per head (US$; purchasing power parity)	5,062b	Current-account balance (% of GDP)	-5.1
  Exchange rate (av) Dh:US$	8.09	FDI inflows (% of GDP)	2.5
  a Actual. b Economist Intelligence Unit estimates.

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  Background: Morocco gained its independence from France in 1956, with the restoration of the Alawi monarchy under King Mohammed V. He was succeeded by King Hassan II in 1961, the ruler most responsible for building modern Morocco. His reign was characterised by a combination of skilful foreign policy and ruthless suppression of domestic dissent. The current king, Mohammed VI, came to the throne in July 1999, at the age of 36, on the death of his father, King Hassan II.

  Political structure: Morocco is a constitutional monarchy, and the king is the dominant political figure, with a dual role as temporal leader and commander of the faithful (amir al-muminin). The king oversees policy, and heads the armed forces. The king has shown little inclination to give up the constitutional rights that give him real power, but amid regional unrest he has launched constitutional reforms that have seen him relinquish the right to appoint the prime minister-now the leader of the largest party in the House of Representatives, the powers of which are only slightly strengthened in the new constitution. The moderate Islamist Parti de la justice et du développement emerged as the largest party in the 2011 election and its leader has formed a coalition government with several secular parties.

  Policy issues: On ascending the throne, the king pledged himself to the principles of constitutional monarchy, the rule of law, a multiparty system, respect for human rights and individual liberties, and improved rights for women. Some progress, albeit uneven, has been made towards these goals, and despite the introduction of a new constitution, opposition groups continue to call for further strengthening of political institutions. The main economic policies are designed to generate faster growth, with the goal of reducing high levels of unemployment, poverty and illiteracy, in part to counter the threat of radical Islam. Progress has been constrained by policy inertia and a bureaucratic and corrupt civil service.

  Taxation: The country's complicated tax system and high tax rates are major constraints on business. The corporation tax rate was lowered from 35% to 30% in 2008. The fiscal regime relies heavily on direct tax yields. Tax fraud is widespread.

  Foreign trade: Morocco has developed its phosphate, manufacturing and agricultural exports, but its competitiveness is hampered by low labour productivity. Morocco is dependent on imported fuel, and food imports can rise sharply in drought years. A structural trade deficit is typically alleviated by substantial tourism earnings and workers remittances.

  Major exports 2011	% of total	Major imports 2011	% of total
  Fertilisers & chemicals	10.9	Fuel & lubricants	25.2
  Phosphoric acid	9.6	Semi-finished goods	21.3
  Phosphate rock	7.4	Capital goods	19.5
  Finished clothes	10.5	Consumer goods	17.2
  Leading markets 2011	% of total	Leading suppliers 2011	% of total
  Spain	18.6	France	15.4
  France	16.9	Spain	14.4
  Brazil	6.0	China	7.7
  US	4.8	US	7.3

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  December 07, 2012

• Structure

  Morocco: Economic structure

  Data and charts: Annual trends charts

  
  

  

  December 07, 2012

• Outlook

  Morocco: Country outlook

  Morocco: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Although the political scene will remain broadly stable in 2013-17 under the rule of the king, Mohammed VI, widespread disaffection with the formal political process is set to continue. The ongoing pressure to boost growth and employment will also make for a challenging political environment. Popular protests are likely to continue but will stop short of calling for the king's overthrow. The king is believed to be well liked and in good health.

  ELECTION WATCH: The next election for the House of Representatives (the lower house of parliament) will be in 2016. Local elections may be held in mid-2013, but these have not yet been officially confirmed. The new constitution includes clauses intended to curb the frequent party defections by members of parliament seen in Morocco, which may help to give some political parties greater stability and credibility. Morocco's complex version of proportional representation tends to result in a fragmented elected chamber: 18 parties are represented in the 395-member lower house. The new constitution should give the prime minister more influence over the coalition, but the Parti de la justice et du développement (PJD)--which controls only 107 of the lower house seats--may still find it difficult to maintain a majority coalition with traditional secular parties while also satisfying its more religiously conservative voting base.

  INTERNATIONAL RELATIONS: Morocco's relations with neighbouring Algeria will remain difficult, largely because of the dispute over Western Sahara, which Algeria would like to see become independent. Morocco is committed to its plan for limited autonomy for the territory, but the Sahrawi national liberation movement, the Polisario Front (PF), which is backed by Algeria, demands a referendum on self-determination. The UN peace envoy to Western Sahara indicated in late November that he is no closer to bringing the two sides to the negotiating table--which suggests that the deadlock is likely to continue. Morocco will seek to further political and economic ties with the wealthy Gulf Arab monarchies, underlined by King Mohammed's eight-day working tour of the Gulf in late October.

  POLICY TRENDS: The government will place heavy emphasis on its efforts to deal with social and economic exclusion--in line with the campaign promises made by the PJD in the run-up to the 2011 election. It will maintain high social spending on slum clearance, rural infrastructure, education and health. Given limited resources, an inefficient bureaucracy and widespread nepotism and corruption--into which the government will make only modest inroads--addressing the country's infrastructure shortcomings will prove difficult, despite recent promises of financial support from the Gulf countries. Poverty remains a pressing concern, and the government is committed to increasing employment and bringing jobs into the formal economy, although it will have limited success.

  ECONOMIC GROWTH: After estimated real GDP growth of just 2.4% in 2012--dragged down by a weather-affected harvest-the Economist Intelligence Unit expects the pace of expansion to pick up to 3.3% in 2013, helped by an improved agricultural performance. Nonetheless, this represents a downward revision from our previous forecast of a 4% expansion. We expect the euro zone to suffer a second successive year of negative growth in 2013 (a contraction of 0.2% compared with our previous forecast of a 0.4% increase), resulting in continuing strong external headwinds for the Moroccan economy. As global economic conditions subsequently improve, growth will then accelerate to an annual average of 4.8% in 2014-17. Despite government strategies to diversify the economy, and notwithstanding the increasingly large contribution made by the services sector, GDP will remain vulnerable to shifts in agricultural production, with almost 40% of Moroccans still employed in the sector. In the longer term the non-agricultural sector's role will gradually increase as the government tries to promote value-added manufacturing and offshore industries. Following a recent EUR1bn (US$1.3bn) investment by Renault in a new car-assembly plant, the government is keen to encourage further investment in the automotive sector. The aerospace industry is also growing at a rapid pace; the government has forecast that an additional 15,000 new jobs could be created in the sector by 2015. In addition, the expansion of the Tanger Med port in the north will add an important logistics element to services growth. Government housing and infrastructure projects will partly offset sluggish private-sector tourism developments, which have been hurt by risk aversion among investors.

  INFLATION: We expect inflation to remain comparatively subdued in 2013-17, averaging 2.7% a year, as government subsidies on energy and food continue to keep prices artificially low, especially in the near term. However, the subsidy system is placing a heavy burden on the public finances and requires reform. Given the politically sensitive nature of subsidies, reform is likely to unfold only slowly, but our forecast profile for inflation (a gradually rising trajectory) takes into account the likelihood of official moves aimed at reducing the heavy fiscal costs. In addition, low historical inflation in Morocco has stemmed not only from the managed exchange rate, but also from deficiencies in the way that the rate is calculated. The underlying cost of living may have increased more rapidly in recent years than official data suggest.

  EXCHANGE RATES: The exchange-rate regime is a tightly managed float against a euro-dominated basket of currencies. Despite opposition from exporters, Bank al-Maghrib (the central bank) argues that this system has been useful in anchoring the economy and keeping inflation low. Morocco will seek to retain a competitive trade position with the EU. We therefore expect the dirham to weaken against a strengthening dollar until 2015, after which it will strengthen against the US currency. Reform of the system is unlikely until later in the forecast period given the volatile regional and international financial climate. Although the authorities will try to keep the dirham competitive in order to help Moroccan exporters, they will not want the currency to weaken too much, given the upward impact on import prices.

  EXTERNAL SECTOR: The current account will remain in deficit, as energy prices stay high and export revenue growth is curbed by weak EU demand, especially in the early part of the forecast period. However, as the pace of global economic expansion picks up from 2014 onwards, export growth will accelerate. Large markets, such as Brazil, India and the US, will become an increasing focus for sales of phosphates and related products. Morocco will attempt to reduce its oil dependency by investing in renewable energy (with international funding to support such projects). The trade and income deficits will be partly offset by surpluses in services and current transfers. Services, particularly tourism--which relies heavily on European demand--and current transfers inflows will perform sluggishly in the near term, owing to EU weakness, but will strengthen later in the forecast period. After reaching an estimated 9.5% of GDP in 2012, the current-account deficit is forecast to narrow over the forecast period, to 4.2% of GDP in 2017.

  December 07, 2012

• Forecast

  Morocco: Country forecast summary

  Country forecast overview: Highlights

  • The political situation is expected to remain broadly stable, but there is potential for continued and more widespread unrest. Protests over poverty and unemployment will continue, as will sporadic strikes by trade unions over pay and jobs. In addition, there is an ongoing risk of attacks by Islamist militants on government or Western targets, although such groups enjoy little public support.
  • The government will continue to promote what it deems to be a moderate, politically quiescent form of Islam. Although the moderately Islamist Parti de la justice et du développement (PJD) leads the coalition government, it is unlikely to herald a marked change in policy.
  • The king, Mohammed VI, and his advisers will maintain their dominance over policymaking despite a new constitution intended to strengthen the prime minister and parliament and to give the judiciary more independence. The king's extensive constitutional powers will not be heavily circumscribed.
  • To build support, the government will try to boost economic growth and reduce unemployment by pushing on with measures to upgrade infrastructure and agriculture, improve education and stimulate manufacturing. However, progress will be slow, held back by limited fiscal resources, inefficient bureaucracy and problems arising from widespread nepotism and corruption. The fiscal deficit will be wide in the early part of the forecast period as the government boosts spending in an attempt to prevent social unrest.
  • Real GDP growth will average 4.5% a year in 2013-17. After contracting in both 2012 and 2013, demand in the euro area—Morocco's main export market and source of tourists—is projected to recover gradually, although it will remain fairly subdued over the forecast period. Economic growth will also be intermittently hindered by the impact of periodic droughts on the rain-fed agricultural sector.
  • Consumer price inflation will be suppressed by extensive government subsidies on basic goods and by the managed float of the dirham against the euro. Dependence on commodity imports will lead to stronger inflation as the authorities begin to dismantle the subsidy system. Private consumption and, indirectly, inflation are linked to the quality of the cereal harvest.
  • The current account will remain in deficit, as energy prices stay high and export growth, tourism receipts and workers remittances are curbed by weak EU demand, especially in the early part of the forecast period. However, as the pace of global expansion picks up from 2014 onwards, export growth will accelerate, leading to a steady reduction in the current-account shortfall.

  

  December 07, 2012

View detailed map

Country Briefing

Land area

710,850 sq km (including the disputed territory of Western Sahara, which covers 252,120 sq km)

Population

31,990,000 (mid-2009 IMF estimate)

Main towns

Population in '000 (mid-2004 census)

Casablanca: 2,950

Rabat (capital) & Salé: 1,398

Fès: 954

Marrakesh: 844

Tangier: 704

Kénitra: 573

Climate

Warm on the coast, hot inland

Weather in Rabat (altitude 65 metres)

Hottest month, August, 18-28°C (average daily minimum and maximum); coldest month, January, 8-17°C; driest month, July, 1 mm average rainfall; wettest month, December, 86 mm average rainfall

Languages

Arabic (official); Berber languages; French and Spanish are also used

Measures

Metric system. Some local measures are also used

Currency

Dirham (Dh) = 100 centimes

Time

GMT

Fiscal year

January 1st-December 31st

Public holidays

The dates of Islamic holidays are based on the lunar calendar and therefore are  approximate. New Year (January 1st); Manifesto of Independence (January 11th); Mawlid al-Nabi (the birthday of the Prophet, February 4th-5th 2012); Labour Day (May 1st); Throne Day (July 30th); Allegiance Day (August 14th); Eid al-Fitr (end of Ramadan, August 19th 2012); King & People's Revolution Day (August 20th); King Mohammed's Birthday (August 21st); Eid al-Adha (Feast of the Sacrifice, October 26th-27th 2012); Green March Anniversary (November 6th); Islamic New Year (November 15th 2012); Independence Day (November 18th)

March 28, 2012