The stimulus package, announced by King Mohammed VI, represents 11% of Morocco’s GDP.
Rabat – Morocco’s Ministry of Economy, the General Confederation of Enterprises in Morocco (CGEM), and the Professional Group of Banks in Morocco (GPBM) have signed the “Economic Relaunch Pact,” officializing the MAD 120 billion ($13 billion) stimulus package ordered by King Mohammed VI.
The document provides details on the mechanisms for injecting MAD 120 billion into the Moroccan economy. The signature ceremony took place on Thursday, August 6.
The convention aims to facilitate the relaunch of economic activity and maintain jobs.
King Mohammed VI first announced the stimulus package on Wednesday, July 29, in his Throne Day speech.
“Some 120 billion dirhams will be injected into the national economy, representing 11% of our GDP — a proportion that will place Morocco at the forefront of the most enterprising countries in terms of post-crisis stimulus packages,” the King said.
The total budget mainly includes two parts: MAD 75 billion ($8.13 billion) of state-guaranteed loans and MAD 45 billion ($4.88 billion) allocated to a recovery fund.
The Central Guarantee Fund (CCG) is set to manage the state-guarantee system for loans. The fund, however, will undergo an institutional reform. It will turn from a public institution to a public limited company called “The Public Enterprise Bank.”
The company is set to have an initial capital of MAD 5 billion ($542 million), provided by the state budget. The capital would cover the default risks of Moroccan businesses benefiting from the loans.
The new state-guarantee loans would take over from the “Damane Oxygene” (Oxygen Guarantee) system. The Ministry of Economy launched the loan mechanism on March 26 to provide businesses impacted by the COVID-19 pandemic with the necessary financial conditions to relaunch their activities.
The new guarantee system includes two distinct programs: “Relance TPE” (TPE Relaunch) and “Damane Relance” (Guarantee Relaunch).
The first program targets micro-sized businesses with an annual turnover of less than MAD 10 million ($1.08 million). Under the program, the state guarantees up to 95% of the loans.
Meanwhile, “Damane Relance” would benefit all Moroccan businesses with an annual turnover of over MAD 10 million. The Public Enterprise Bank will cover 80% to 90% of companies benefiting from the programming, depending on the businesses’ size.
The main objective behind the new mechanisms is to allow the reconstitution of the operating budgets of businesses, and thus reduce the level of inter-company loans.
Moreover, a new guarantee program is set to benefit Morocco’s public enterprises affected by the COVID-19 pandemic. The program will be exclusively dedicated to the payment of debts, especially for micro-sized businesses.
Strategic investment projects
The second part of the package, valued at MAD 45 billion, will go into financing the creation of a recovery fund called “Essor” (Soaring). The state budget will provide MAD 15 billion ($1.63 billion), while national and international institutions will mobilize MAD 30 billion ($3.25 billion).
The fund will directly finance strategic investment projects across Morocco through public-private partnerships. Projects will be selected and financed based on their job creation potential.
The Economic Relaunch Pact gives special attention to national preference. Moroccan public establishments and enterprises will commit to prioritizing locally-produced products as long as they respect technical specifications and international standards. The national preference, however, would be in compliance with the commitments Morocco made within the framework of its association and free trade agreements.
The convention is also set to revitalize the “Intelaka” (Launch) program. The program, launched on February 3 on royal instructions, aims to encourage Moroccan entrepreneurs to create more micro-sized businesses.
The program offers guaranteed loans to businesses with less than five years of activity and a turnover that does not exceed MAD 10 million. It is expected to facilitate the financing of approximately 13,000 micro-sized enterprises every year.
In addition to the various financing programs, the Economic Relaunch Pact’s signatories pledged to improve the business climate and facilitate investments through accelerating digitization and simplifying administrative procedures.