The Minister of Economy and Finance gives an interview to the « L'Economiste » newspaper : 31/07/2019

The Minister of Economy and Finance gives an interview to the « L

Mr. Mohamed BENCHAABOUN, Minister of Economy and Finance, gave, Wednesday, July 31st 2019, an interview to the "L'Economiste" newspaper. During this meeting, he tackled in particular the recommendations of the 3rd Tax Conference, the reform of Public Establishments and Enterprises (EEP), the payment deadlines and the international market entry planned for this year.

Here follows the interview given by the Minister to the « L’Economist » entitled "Budget Law 2020: Benchaaboun announces new fiscal measures":

"(L’Economiste): what progress have you made in the framework law on taxation reform, given that the Finance Bill 2020 must involve the first provisions?

- Mohamed Benchaaboun: As I was personally involved, the preparation of the framework law initiated after the National Conference on Taxation to set up the bases, the principles and the objectives of the tax reform. This draft is almost technically finalized and will be presented shortly for review to the General Secretariat of the Government. Then, we will initiate its approval process. Nevertheless, the 2020 Finance Bill will essentially include the first steps towards the recommendations of the taxation conference.

There is an increasing trend towards direct grants to businesses instead of tax expenditures for sectors. How should this be turned out in practice ?

- The rationalization of tax expenditures is among the key recommendations of the National Conference on Taxation. The trend towards the granting of direct aids is within the framework of an economic approach for an efficient management of the State’s support to businesses. Thus, there has been discussion on avoiding any systematic use of tax incentives when it would be possible to enable businesses to benefit from a similar financial advantages through aids governed by the legislation and regulations in force.

On your appointment, the royal instructions for the reform of the State’s portfolio were clear. What did you do in this area?

- Following the high royal guidelines, especially those provided during the Council of Ministers in October 10th 2018, the Ministry of Economy and Finance launched an action plan on the reform of some public establishments and enterprises ( EEP). The aim of this program is to review their economic and institutional models, sale some assets and rationalize their expenditures, within the framework of contract-programs established with the State.

In this context, work has been initiated for a number of major institutions, including ONEE, ONCF and others, with the following aims : First, reviewing organizational models and improving the governance of the relevent bodies for a better management and further openness to partnerships based on an economically sustainable business plan and in keeping with their key tasks. Second, the refocusing on core missions through the sale of investments in subsidiaries and non-operating assets. The objective is to redress the financial situation and improve payment deadlines. A third objective is the optimization of operating and structural costs.

- What progress have you made concerning the late payment issue ?

- The high guidelines in the royal speech of August 20th 2018 to public administrations and local authorities to pay their due to companies, created a real dynamic on the late payments issue. Many measures have been adopted resulting from numerous reform actions, concrete steps to address this issue and awareness-raising actions of the numerous stakeholders.

It is within this framework that I have issued a first circular on September 18th 2018 to the managers of the EEPs to increase awareness on the issue of payment delays and serve as a model by setting up information systems, monitoring and control devices and mechanisms to assess progress in this area.

Therefore, to increase and speed up trade between suppliers and their main contractors, electronic platforms were developed and put online, including complaints processing addressed to EEPs, in this case the platform "Ajal" available on-line, October 4th 2018.

In addition, during the second meeting of the Payment Periods Observatory, held, June 24th 2019, an assessment of the reforms acheived was carried out. New measures were introduced and the commitments of the relevant stakeholders in the major project were asserted to reduce payment terms and payables in the public and private sectors. Similarly, this meeting enabled the Observatory to establish its initial bases to provide proposals and inform public opinion, including its action plan for the years 2019 and 2020 and methods to prepare and publish its first much awaited report as a reference on this issue.

- How was the process of the sale of the State’s shares in the capital of Maroc Telecom conducted?

- In compliance with the legal and regulatory requirements governing privatizations, upgrading works to carry out the Maroc Telecom transaction were initiated. This includes the support of two national investment bank groups, charged by the Ministry after extended consultation and a third international investment bank, authorised as advisor to Maroc Telecom. This allowed to match up the ranges established in the valuation and enhance this entity in setting the minimum price of the action at 125 DH.

In addition, This sale operation is the largest ever in Casablanca Stock Exchange since 2004. In addition, institutional investors are already committed to the capital of this company for almost 20 billion DH.

After this transaction, the total average transfer price was MAD 126.29 per share, thus distributed as follows: MAD 127 for 6% of the capital in connection with the transfer of blocks, MAD 117.80 for employees and 125.3 DH for the rest of the public offerings.

- When and how much are you planning to raise in the international financial market?

- A release on the international financial market is actually scheduled for this year. The choice of the exit window will depend on the conditions in the weeks to come, which should ensure a positive reception of international bond investors and thus Morocco’s successful return to this market. As for the amounts to be raised, it will be a benchmark size of a minimum of 1 billion (€ or $) to provide some liquidity to investors. The adoption of the currency and its amount will of course depend on market conditions. "