By Loubna Flah
By Loubna Flah
Morocco World News
Casablanca, August 10, 2012
The news about the lack of liquidity and the shortage in foreign currency are making the national headlines every day. The signs on national economy are not reassuring. When the Moroccan government launched its “Fund Recovering” operation against tax evaders, it did not fathom that this measure would sow the seeds of anxiety in the business circle. Soon after, the banks noticed a massive withdrawal of deposits which has caused a severe lack of liquid assets.
As the liquidity crisis worsened, the Moroccan authorities asked the IMF for a precautionary line of credit worth $ 6, 2 billion to prevent any general bankruptcy that would incapacitate the national economy. The IMF approved the loan request last Friday.
Nevertheless, there are many dissenters to the IMF interference in the national economy. The former minister of finance Mr. Fathallah Oulalou and member of the Socialist Union of Popular Forces, the party leading the opposition, stated in a debate organized last Wednesday by his party and published in the Moroccan daily L’Economiste that the “the return of the IMF to Morocco is no good news”.
He recalls the intervention of the IMF in 1983 intended to alleviate the burden of recession. Back then, the IMF pout forward the Program of Structural Adjustment (PSA). The PSA packages have been long criticized for making excessive demands of austerity in return of the financial aid it offered.
Mr. Oulalou added “When the IMF sets a program; there are always other programs that follow”. He cautioned against the IMF conditionality drawing the parallel with the Greek default.
Abdelwahed Radi, current head of the Socialist Union of Popular Forces, seized the opportunity to assert the role of the opposition as a source of alternative ideas and polices in this particular period.
The popularity of the IMF financial policies has suffered a fatal blow in the world. The conditionality of its standby agreements led many countries into deep recessions, mainly because of the cuts it imposes on public spending. These austerity measures undermine the indebted nations’ sovereignty, not to mention their impact on the quality of life.
The IMF strategies have been considered as flawed by many experts, especially since they contribute in squeezing public finances of indebted countries. In his address, Mr. Oulalou pinpointed that “Morocco is likely to lose its sovereignty in terms of decision making.” “The finance law will be drafted in Washington not in Rabat,” he added.
The IMF is an international financial institution that counts 189 members. Each of them contributes with funds to a pool from which countries with payment imbalances can borrow. Yet, not all the members have the same weight in decision making.
The IMF is based on a quota system where members are assigned a contribution that determines their voting power. To put it simply, the more a state member contributes, the stronger is its voice. This has resulted in a US monopoly as it is the major shareholders in the IMF. Thus, the allocation of loans has become a game of alliances and geopolitical interests rather than a concern for the population affected by recessions.
Mr. Oulalou suggests a four-step plan to exit this economic turbulence zone. He recommends the adoption of new reform strategies, the empowerment of human resources, regionalization and the capitalization on Phosphates production through the consolidation of economic relations with trading partners from the new emerging economies.
Mr. Habib Maliki, former minister of national education and a university professor of economics leveled sharp criticism against the current government for “lying to the public opinion about the vulnerability of the national economy.“
By the same token, he warned against the repercussions of austerity measures and recommended the launching of big investment projects liable to create job opportunities and to stimulate growth.
The IMF policies have turned to have a negative impact on countries like Argentina, Brazil and Korea. Instead of growth, many countries experienced stagnation and remained trapped in debt.
After a long history of foreign intervention in the Egyptian economy during the Mubarak era, the post revolution Egypt refused to borrow from the IMF. Brazil and Argentina are also refusing to borrow from the IMF again.
These countries have turned to alternative institutions like the Bank of the South that capitalizes more on the construction of social programs and infrastructure rather than recovering the debt at all costs. The pressing question remains now why do Moroccan decision-makers refuse to learn from history?
