Rabat – One of the most anticipated events of the year, Bank Al Maghrib released on Thursday July 20 its report on financial stability for 2016. Based on a systemic risk mapping, the report assesses the risks of the Moroccan financial system.
Non-financial public companies are in hot water. According to the Moroccan central bank’s report, the latter have registered an acute growth of their debt, reaching MAD 716 billion with 3.4 percent increase in 2016, compared to a 2.8 percent decline in 2015.
The acceleration of this debt was largely driven by companies in the public sector, whose debt increased by 7.5 in 2016.
Analysis of a sample of almost 14,000 public and private nonfinancial companies showed a slight increase in their rate of long-term debt, which stood at 41 percent of their own funds at the end of 2015.
BAM’s report also revealed that payment delays, especially regarding SMEs, continued to increase. This phenomenon, says the bank, is “reaching worrisome levels for certain sectors of activity, such as property development, construction, transport and communications and services provided to businesses.”
Driven mainly by the external debt of public companies and institutions, the growth of total public debt increased by 4.8 percent to MAD 826.9 billion in 2016, representing 81.4 percent of GDP instead of 79.9 percent in 2015. Its public enterprises component increased by 5.9 percent to MAD 169.6 billion, representing 16.7 percent of GDP instead of 16.2 percent in 2015.
The report stressed that growth of nonfinancial enterprises debt comes mainly from public enterprises at 71 percentage. In 2016, public institutions recorded a debt surplus of MAD 17 billion.
Under these conditions, the Treasury’s debt has naturally increased from 63.7 percent of GDP to 64.7 percent. Overall public debt also increased to 81.4 percent of GDP, driven mainly by the external indebtedness of public companies and institutions. This situation should nevertheless be reversed as from this year, the bank writes.
Bank debt, which represents 19.4 percent of public companies’ financial debt, has increased steadily in recent years according to BAM, registering the largest increase since the end of 2016, which saw a rise of 24.4 percent.
For the central bank, this upward trend in bank debts reflects the continuing investment effort of some of these companies.
Non-financial companies’ use of external debt continued to be quite robust in 2016, but at a slower rate of growth of 8.3 percent compared to an average growth rate of more than 16 percent over the period 2006-2015.
This debt of a relatively high level, which represents 19 percent of GDP in 2016, continues to be concentrated by state-owned companies, which could call into question their hedge against currency risk, under a more flexible regime.
