Morocco achieves low overall compliance with international standards and codes, with a score of 32.5 out of 100 in our Standards Compliance Index. Morocco's compliance in the area of macroeconomic fundamentals is relatively high. However, it lags behind international standards in the market infrastructure and financial supervision categories. In the financial sector, the country has enacted new laws that promise to strengthen the regulatory framework for banking, securities, and insurance supervision. In the institutional and market infrastructure categories, Morocco is in various stages of reformation. There are initiatives to bring its corporate governance codes, accounting and auditing standards, and the insolvency framework closer to international requirements. In addition, Morocco has enacted a new law on anti-money laundering and has launched a real-time gross settlement system.

Macroeconomic Policy and Data Transparency

A 2007 Annual Observance report by the International Monetary Fund (IMF) notes that Morocco met all the SDDS requirements at the time of subscription in 2005. According to the most recent information on the IMF's SDDS website, Morocco meets the SDDS requirements for coverage for all data categories. However, it takes the periodicity and timeliness flexibility options for production index data, and the timeliness flexibility option for general government operations data. According to the 2007 report by the IMF, updates of advance release calendars are timely. Data provided on the IMF's SDDS website also indicates that Morocco meets the SDDS access dimensions, but falls short for certain data categories in terms of SDDS integrity and quality requirements. Nonetheless the IMF's 2006 Article IV Consultation report on Morocco notes that data provided to the IMF is sufficient for surveillance purposes. More »

Monetary policy in Morocco is conducted by the Bank Al-Maghrib (BAM). With the entering into force of new central bank statutes in February 2006, the autonomy of the BAM was greatly strengthened. While the 2006 Oxford Analytica report on Monetary Policy in Morocco maintained its "Enacted" rating, the score improved from the 2005 assessment. In addition to strengthening the BAM's independence, the new statutes changed the composition of the council, the monetary policy making body of the BAM, making it less susceptible to influence by other government bodies. The new statutes also established price stability as the main objective of monetary policy. In this context, the 2006 Article IV consultations with the International Monetary Fund noted that the Moroccan authorities are continuously strengthening the monetary policy framework, and are considering a move towards adopting inflation targeting in the medium term. With respect to exchange rate policy, the new statutes clarified the responsibilities between the BAM and the Ministry of Finance. More »

Morocco has had two principal assessments of its Fiscal Policy Transparency conducted. In 2005 by the International Monetary Fund (IMF) and in 2006 by Oxford Analytica (OA). In its 2006 report, OA maintained its "Enacted" rating from the previous year, but noted that the overall numerical rating had improved, due to better availability of information. In 2005, the IMF published a Report on the Observance of Standards and Codes, which viewed fiscal transparency in Morocco as generally guaranteed through a mixture of strict controls to ensure the correctness of expenditures, adequate legal safeguards, and fiscal and accounting standards that had improved in the recent past. The assessment noted room for improvement in various areas, however. Budget coverage and monitoring should be gradually expanded, government accounting should be reformed and modernized, financial reporting during budget execution should be improved, and fiscal risks should be better evaluated. Long-term reforms should aim at introducing performance-oriented public management and reducing the current emphasis on ex-ante controls. Instead, the focus should be on ex post evaluation and controls. According to the 2007 Article IV consultations with the IMF, the Moroccan authorities are developing a medium-term expenditure framework with a view to move to more performance-based budgeting, which should increase the predictability of fiscal policy in the process. More »

Institutional and market infrastructure

The 2003 World Bank assessment of the insolvency and creditors rights systems in Morocco against the Principles and Guidelines for Effective Insolvency & Creditor Rights Systems (the Principles) developed by the World Bank commended Morocco for progress achieved in improving creditor rights and insolvency procedures. However, insufficient enforcement was found to be a major impediment to the efficient functioning of the system. Specifically, creditor rights and enforcement procedures, and the legal framework for corporate insolvency were assessed as "largely observant" of the Principles. However, requirements pertaining to courts were found to be between "largely observant" to "materially observant," and the requirements pertaining to insolvency practitioners were found to be "materially non-observant" or "non observant." As stated on the World Bank Global Insolvency Law Database website, after the assessment had been completed, the World Bank and the Moroccan authorities met to discuss the results of the assessment and possible technical assistance from the World Bank. It was noted that the Moroccan authorities were in the process of addressing the shortcomings identified during the evaluation. More »

According to the assessment of accounting and auditing practices conducted by the World Bank in 2002, Moroccan accounting standards are conceptually different from International Accounting Standards (IASs). The World Bank concluded that, since the establishment of the National Accounting Council (Conseil National de la Comptabilité, or CNC) in 1989, Moroccan accounting standards have improved significantly, but that inadequate enforcement and flawed standards-setting process impede further progress. One of the factors contributing to weak enforcement is the inefficient distribution of resources to the CNC. In line with the World Bank's recommendations, Moroccan authorities and other stakeholders developed an action plan that was submitted in February 2004 to the Government. A 2005 World Bank report reiterated that the Moroccan authorities are committed to the adoption of IFRSs. More »

A Report on the Observance of Standards and Codes on Corporate Governance for Morocco was conducted in 2001 and was published in French in 2003. According to the report, summarized in a 2003 International Monetary Fund (IMF) assessment, significant progress in improving corporate governance, mainly at the legislative level, had been made in the years up to 2001. The assessment notes, however, that the regulations alone do not suffice if they are not enforced by the regulators and courts. At the time of the assessment, the powers of the Securities Commission - Conseil Déontologique des Valeurs Mobilières (CDVM) were deemed too limited to address corporate governance issues. However, according to a 2007 IMF Working Paper by A. Tahari et al., the CMV law was amended in 2004 to strengthen its powers. The 2003 IMF assessment recommended that Morocco develop a code of best practices in corporate governance that includes a comply-or-explain clause for listed companies. It also recommended creating an institute of directors of Moroccan corporations. According to a March 2007 press release from the International Finance Corporation, Morocco has launched a national task force comprised of key actors in the field to formulate a national corporate governance code. More »

In 2002, the World Bank conducted an assessment of accounting and auditing frameworks in Morocco in order to evaluate their strengths and weaknesses and propose an action plan to improve existing practices. International Standards on Auditing (ISAs) were used as a benchmark for the evaluation of Moroccan auditing requirements. The World Bank concluded that Moroccan auditing standards, promulgated by the Certified Public Accountants Association (Ordre des Experts Comptables du Royaume du Maroc, or OEC) in 1998, are "largely consistent" with ISAs existing at the time of issuance of the Moroccan standards. However, they fail to incorporate certain ISAs requirements, are less detailed and do not cover all essential auditing topics. Moreover, the World Bank observed that the majority of chartered accountants do not follow existing Moroccan standards because of the lack of quality assurance mechanisms, regular professional training, and implementation guidelines. The World Bank recommended, among other things, full adoption of ISAs, complemented by standards specific for Morocco. In line with the World Bank's recommendations, Moroccan authorities and other stakeholders developed an action plan which was submitted in February 2004 to the government. No further information as to the implementation of this plan is publicly available. More »

The U.S. Department of State (DoS), in its report "International Narcotics Control Strategy Report 2007," states that the draft anti-money laundering law in Morocco "adheres to international standards." The International Monetary Fund (IMF), in a 2007 report, notes that Morocco has adopted and published this anti-money laundering draft legislation, and that it will allow the country to establish a Financial Intelligence Unit (FIU). According to the 2007 U.S. DoS report, in June 2003, Morocco enacted a counterterrorism bill which allows for information gathering on suspected terrorists, the freezing of funds used for terrorist activities, and the confiscation of such funds. Moreover, per the 2007 U.S. DoS report, the Central Bank of Morocco issued Memorandum No. 36, which requires banks and other financial institutions to have internal controls such as reporting suspicious transactions, retaining these reports and instituting Know Your Customer (KYC) requirements. However, the anti-money laundering legislation in Morocco is fairly new, so it is still too early to measure its effectiveness. Other than the 2007 U.S. DoS report, there is very little information publicly available as to Morocco's compliance with the Financial Action Task Force's Forty plus Nine recommendations and special recommendations. More »

The International Monetary Fund (IMF) released the findings of its assessment on Morocco's payment systems in a 2003 report, in which it indicates that in 2002, at the time of the assessment, there were no payment systems in Morocco that met the Committee on Payment and Settlement Systems definition for systemically important payment systems (SIPS). However, the IMF did assess the overall legal environment for payment systems in Morocco, and the functioning of the Moroccan Interbank Remote Clearing System (SIMT), which became operational in June 2002. The IMF's 2003 report concludes that there were significant deficiencies in terms of the technical and legal aspects of the payment system structure; risks were not clearly defined to participants; and the Central Bank of Morocco's (Bank Al-Maghrib, or BAM) roles and responsibilities over the payment systems were not clearly identifiable. However, a later report by the World Bank in 2005 mentions Morocco's reform process and its goal to reform the institutional and legal framework governing electronic payment instruments and clearing and settlement systems. Another report, by A. Tahari et al. in 2007 mentions that the new real-time gross settlement system, called the Système des Règlements Bruts du Maroc (Moroccan Gross Settlement System, or SRBM),was launched in 2006 and reduces the risk and time on settlements, thus ensuring the security of transactions. Nonetheless, there is insufficient information publicly available as to Morocco's actual compliance with the Core Principles for Systemically Important Payment Systems. More »

Financial Regulation and Supervision

The International Monetary Fund (IMF) conducted a Financial Sector Assessment Program (FSAP) of Morocco in 2003 and reported that, at the time, Morocco's legal, regulatory, and supervisory framework was in need of further improvements. However, according to the report, Morocco had come a long way in implementing much needed reforms to the financial sector. A 2005 report by the IMF noted that several recommendations made in the IMF's 2003 assessment were being addressed, and the authorities were in the process of implementing a new Banking Law (enacted in 2006) that would address some of the IMF's earlier regulatory and supervisory concerns. In its 2007 Article IV Consultation report, the IMF states that the 2006 Banking Law has increased the supervisory powers of the Central Bank of Morocco and increased cooperation between the various financial sector supervisory agencies. Moreover, according to a 2007 report by A. Tahari et al., Morocco's reform process since 2002 has resulted in the implementation of most of the Basel Core Principles (BCPs) by Morocco. In spite of this rather strong statement, there is no other substantive or corroborative information publicly available indicating Morocco has implemented most of the BCPs. A 2005 World Bank report, however, indicates that the World Bank is funding Morocco's Financial Sector Development program and, through this process, will help Morocco set up a legal, regulatory and supervisory framework for the banking sector that will conform to international standards. A 2006 World Bank Status Report indicates that the Moroccan authorities, with World Bank assistance, have made substantial progress towards achieving their goals. More »

Morocco's compliance with the International Organization of Securities Commissions (IOSCO) objectives and principles was assessed by the International Monetary Fund (IMF) in 2003. The IMF assessment team concluded that measurable progress had been made in the regulatory and institutional aspects of securities market supervision, but cautioned that the underlying legal framework was somewhat inadequate, and should be substantively improved. The majority of the concerns raised by the IMF assessment related to the capabilities of the Securities Commission (Conseil D'eontologique des Valeurs Mobiliéres, or CDVM). Most of these shortcomings have been addressed, according to a November 2005 Program document by the World Bank. The World Bank attributed these improvements to the adoption of a variety of laws that bring Morocco's legal framework in securities market regulation and supervision close to alignment with international standards. The World Bank program objective is to address the outstanding legal issues and to incorporate all IOSCO principles. The changes that have already been implemented have increased the mandate of the CDVM and have given it more power to regulate the market. In light of the now-broader scope of supervision, the staffing and technology capacities of the CDVM need to be increased, a process that according to the World Bank has already begun. More »

In its 2003 Financial Sector Stability Assessment, (FSSA) the International Monetary Fund (IMF) commended the Moroccan authorities for the progress achieved in reforming the financial sector. However, the IMF noted that Morocco's compliance with the Insurance Core Principles (ICPs) promulgated by the International Association of Insurance Supervisors (IAIS) was very low. Internal governance, internal control, asset and risk management, and information sharing with foreign supervisory agencies were identified as major weaknesses within Morocco's insurance supervision. The Moroccan authorities welcomed the IMF assessment and began implementing its recommendations through a government financial sector reform program. In 2005, the World Bank approved a Financial Sector Development Policy Loan to Morocco to support this reform program. As far as the insurance sector is concerned, the aim of the reform is to bring insurance supervision in line with IAIS principles. At the time of the 2005 World Bank report, the Moroccan authorities had already issued a revised Insurance Code that contained important new implementing regulations. In 2006 the World Bank reported on the significant progress achieved in the implementation of the project which, in the insurance sector, involved enhancement of accounting standards and prudential requirements, as well as preparation of a law on insurance mechanisms for natural disasters and political events. More »

Legend:

Credit Ratings

Moody's Ba1/Stable

Fitch BBB-/Stable

Standard & Poor's BB+/Positive

Macroeconomic Data

2007 GDP (Current Prices): 73.429 billion USD (IMF)

2007 GDP (Per Capita): 2,389 USD (IMF)

2008 GDP (Growth Forecast): 6.5% (IMF)

2008 Inflation (CPI): 2% (IMF)

2007 Unemployment: 15% (CIA)

2006 Foreign Direct Investment

FDI (Inward): 2.898 billion USD (UNCTAD)

FDI (Outward): 0.468 billion USD (UNCTAD)

2006 Official Development Assistance

ODA (Received): 1,046 million USD (OECD)

ODA (Disbursed): N/A million USD (OECD)