Statement of the Minister on the maintenance by Fitch Ratings of Morocco sovereign rating : 08/11/2012

Statement of the Minister on the maintenance by Fitch Ratings of Morocco sovereign rating

The Minister of economy and finance, Mr. Nizar BARAKA, stated Wednesday, November 07th2012 in an interview to the MAP that the maintenanceby the rating agency Fitch Ratings of Morocco sovereign rating "strengthens our country`s profile, and reinforces our strategy to enter international markets".  

The confirmation by Fitch Ratings of (Issuer Default Ratings / IDR) to BBB-with a stable outlook can be explained by the recent round of His Majesty King Mohammed VI, may God assist him in the Gulf countries "who helped mobilize substantial financial resources to finance structural investments planned within the State Budget," stated Mr. BARAKA, noting that, for the agency, these are positive elements that reinforce the "important economic dynamic in our country`.

He also attributed this notation to the measures introduced as part of the 2013 finance bill (PLF),which are proofs of a "firm commitment of the Government to reduce the budget deficit, to bring significant compensation reforms " and contain the volume of expenditure.

The Minister noted that the international rating agency took into consideration measures having strong scope for solidarity "which are part of the social cohesion fund, and which provide an outstanding contribution over three years for higher incomes and businesses that realize high profits" and "for the benefit of poor people" most exposed to the crisis and the consequences of the measures taken within the framework of the compensation fund reform.

On a question about the importance of political factor in Fitch`s choice of "stable" outlookprospect, Mr. Baraka stressed the significant role of thepolitical dimension for Morocco. He quoted, in this context, that the country strengthened and acceleratedits political transition, particularly in the context of the new Constitution "which reinforces its stability in a region characterized by high volatility".

Similarly, the Minister made a focus on the strengthening of the democratically elected institutions, including the Parliament with new attributions, granted to it by the new Constitution, and its role in the improvement and control of government activities, noting also the effect "of the transparent elections which brought a Government resulting from ballot boxes" and enjoying "high popularity".

In addition, Mr. BARAKA was pleased with the dynamism of the civil society, "reinforced by the new attributionsof the Constitution with the possibility of making a number of contributions on the legislative level as well as through petitions".

He noted that besides the appropriateness of the Kingdom`s economic policies and its political stability resulting from the new Constitution, the social aspect would have played an important role in Fitchdecision, including the priority given to the social issue in government program, in accordance with the Royal guidelines within the framework of human development.

The Minister reviewed, in this respect, several axesof government policy, including the expansion of the social coverage for the poorest through the Medical Assistance Plan (RAMED), and the concept of "targeting public policies, "illustrated by the direct assistance to rural populationsby the Rural Development Fund.

He also quoted the support given to divorced women thanks to the family Solidarity fund and the targeting of the poor populations in the rural world through the Tayssir program.

"This concept of social targeting and the State`s orientation towards an accelerated and advanced regionalization", "are all elements that reinforce the positive momentum to achievea more balanced, interdependent society and where the social inequalities are reduced", he emphasized Asked on the slowdown of economic growth in 2012 compared with 2011 and how this situation had no negative influence on the rating of the Kingdom, Mr. BARAKA indicatedthat it is "because this slowdown is attributed to rainfall, and thus related tothe agricultural GDP", indicating that non-agricultural GDP, "despite the crisis and the decline in foreign demand inMorocco» continues to experience a sustained growth which varies between 4.3 and 4.5%».

"The impact of the crisis is estimated around 0.3 points of GDP, reflecting the resilience of the national economy," he pointed out. The Fitch Ratings teamnoted that there is "a real productive diversification in the country with the emergence of new export sectors (automotive, aerospace, off-shoring...)" "that, given the dynamics they know,shouldmake a positive contribution to economic growth," according to the Minister.