A Moroccan delegation headed by Mr. Abdellatif JOUAHRI, Governor of Bank al Maghrib and Mr. Zouhair CHORFI, Director of the Treasury and External Finance Department, representing Mr. Sallaheddine MEZOUAR, Minister of Economy and Finance, and composed of their collaborators, arrived in Washington on 24th, April 2009 to participate in the World Bank and IMF spring sessions held on 25th and 26th, April 2009.
During its visit to Washington, the Moroccan delegation held a series of multilateral, bilateral and regional meetings.
At the multilateral level, Mr. CHORFI took part on April 26th, 2009 in the Joint Ministerial Development Committee of the Boards of Governors of the Bank and the Fund, where Morocco is a member. The main objective of the meeting was to study the transfer of real resources to developing countries.
The Development Committee session dealt with issues related to (i) the implications of the economic crisis on developing countries and the role of international financial institutions, (ii) the relevance of ensuring enhanced voice and participation of developing and transition countries in the governance of the World Bank Group. Progress made on themes related to the 2009 World Follow up Report and internal governance of World Bank Group was also on the session`s agenda.
In his statement, which was distributed to the committee members, Mr. Mezouar underscored the particularly difficult times the world economy was going through, marked by uncertainty and profound economic difficulties. He added that the world economic crisis, occurring right after the food and oil crisis, had had an extremely harsh impact on many developing countries.
The Minister`s statement indicated that this world economic crisis, which first emerged in developed economies, had had disproportionate and negative repercussions in developing countries, resulting in a sharp downturn in economic growth and provoking a credit shortage as well as an increase in the rate of poverty and unemployment. As a matter of fact, the crisis has adversely affected the balance of payments, national budgets, competitiveness, access to public and private financing, Direct Foreign Investment, exports, tourism and fund transfers from Moroccan Residents Abroad.
Furthermore, the Minister of Economy and Finance underlined the seriousness of the crisis, saying that even in the likely event of an upturn in 2010, production would not reach its pre-crisis level as budgetary pressure would persist and the unemployment rate would continue to rise in most developing countries more than half way into 2011.
Mr. Mezouar indicated that the impact of this crisis on the majority of developing countries is mostly economic but also human, as it has led to a rise in unemployment and poverty. In fact, the crisis has seriously jeopardised the Millennium Development Goals. This crisis would exasperate poverty in these countries. 53 million people would join the ranks of 155 million people already living below the poverty line due to soaring foodstuff prices in 2008.
Mr. Mezouar called for exceptional efforts to alleviate the effects of the crisis, and urged committee members to provide the necessary funds to protect the poor in the poorest countries, especially that the majority of these countries lack the necessary resources to boost their budgets in the face of decreasing revenues and tightening external financing.
Mr. Mezouar considered that the economic development of the poorest countries should be the priority for the international community, which should result in strategies to boost the world economy, and integrate developing countries` economies within the world economy, to reach the MDG.
In his statement, Mr. Mezouar noted that multilateral development banks, particularly the World Bank, play a crucial role in assisting developing countries in implementing resurgence programmes and maintaining investment in these countries. For Mr. Mezouar, the help of financial institutions is crucial, as developing countries` needs are significant, and should focus on the financing of the balance of payments, budget support for high priority social expenditure, SME`s financing, infrastructure investment, promotion of the private sector and recapitalisation of banks in difficulty.
Such a crisis would require the financing power of developing countries, but due to the shortage of resources on the financial market and within Multilateral Development Banks, resulting from a rise in credit cost, a serious threat weighs on the world economy, with an emerging indebtedness crisis, and the risk of a growing number of countries being confronted once more with cessation of payments.
In his statement, the Minister of Economy and Finance underlined the exceptional nature of the current situation, and called for the setting up of innovative tools by international bodies, to adequately respond to the specific needs of different countries by simplifying conditionality, developing flexible tools, mainly in terms of providing budget support, as well as putting in place emergency aid to finance foreign trade. He deemed it equally urgent that International Development Associations and the concessional desks of other Multilateral Development Banks increase their contribution substantially.
Mr. Mezouar indicated that the extra costs relating to the World Bank`s mobilisation of financial resources on the international market should be fully born by intermediate-income countries which urgently need financing on affordable terms.
Given the importance of trade to growth, the eradication of poverty and reaching the Millennium Development Goals, Mr. Mezouar deemed it necessary to maintain trade opening up and to resist pressures resulting from recent protectionist attempts.