By Loubna Flah
Morocco World News
Casablanca, May 1, 2012
According to the Moroccan daily Le Soir, Morocco may not be immune from the repercussions of the global financial crisis. The latest CDG capital Research reveals that the national banking sector is prone to the financial market’s unpredictable fluctuations, despite the fact that this sector has displayed a better performance in 2011.
The threat emanates mainly from the contraction in the availability of foreign currency in the Moroccan financial market. The reduction in the influx of foreign currency has plunged the banking system into a state of low liquidity as opposed to the significant surplus in foreign currency liquidity in 2006. In response, the Moroccan central bank conducted a revision to the intervention rate in order to reach 3% instead of the current 3.25%. This measure is paramount to the availability of loans currently subject to government regulations and restrictions.
The approval of loan applications is determined not only by the judgment of a banker, but also by a certain amount of government regulation which seeks to maintain the liquidity of banks in general. Government regulation of loans takes the form either of absolute prohibition of certain types or of conditional restrictions of others.
A slowdown in the economic growth in Morocco is expected to reach 3%. Experts attribute this gradual decrease to the high demand on loans and to the fluctuation of commodity prices. The signs are alarming as the deficit in currency liquidity jumped from 4.2 billion MAD in 2010 to 38 billion in 2011. It is of note that the currency reserves amounted to 168.8 billion of in 2011 which is the lowest performance since 2006. This decrease in currency reserves has a direct impact on public finances already plagued by the budget deficit.
Seemingly, the Euro crisis is reaching the Moroccan financial market as the recession in Europe affects the national balance of payments. Analyst reports confirm that the European public debt has deeply affected the national economic structures given that Europe remains Morocco’s first economic partner with 69% of national trade exclusively directed towards European countries like France and Spain. Morocco’s economic relationship with Europe has different dimensions that include exports, expatriate remittances, tourism and foreign investments that have shrunk to 21% between 2010 and 2011. The textile sector and the food industry are the most affected by the recession in Europe. In textiles, the demands for products have reached recently 30% and seem to be steadily shrinking. The repercussions on the job market are disastrous since many factories are compelled to cease their activity.
The food industry is also ailing. The demands for Moroccan food products did not go beyond 1.6% in 2010. It is of note that the food industry sector counts 1,700 companies and employs 60,000 workers.
