Announcement of Financing in Morocco on December 21, 1962

~l<J~ International Bank for Reconstruction and Development International Finance Corporation I If( I - ------~.. :<~' 1818 H STREET, N. W., WASHINGTON 25, D. C. TELEPHONE, EXECUTIVE 3,6360 ~ ~o~o ; o 1,"1 ~ c? <. FJNA~G Bank Press Release No. 62/43 SUBJECT: Financing in Morocco IFC Press Release No. 62/11 December 21, 1962 The World Bank and its a.ffiliate, the International Finance corporation, todajr a.ll!lOunced that they will finance an expansion of the Banque Nationale pour le Developpement Economique (BNDE), a development bank in Morocco. This is the first time the World Bank and IFC have engaged in a joint financing, and is also the first of a number of combined operations now in prospect whereby the Bank will provide loan funds and the TFC will provide share capital for industrial development banks in the less developed countries. • Mr. Eugene R. Black, President of the Bank and of IFC, commented, "The Bank has long considered that development banks have a strategic role to play in en- c~uraging the establishment and growth of industry in developing countries. This joint financing in Morocco demonstrates the compreherv.:-ive and versatile kind of sup- port that the World Bank and IFC, acting togethe-r·, can give to these important instj_tutions. 11 The World Bank has agreed to lend the Moroccan bank the equivalent o.f $:i.5 mil- lion in foreign exchange, and the IFC intends to invest 7.5 million Moroccan dir- hams (equivalent to US$1.5 million) in common stock o.f BNDE, representing three c;,ua.rters of a new stock issue. The Bank and IFC financing will substantially increase the funds available to BNDE for credits and other investments. BNDE will devote the major portion of its resources to .financing private industrial enter- prises, thereby making an important contribution to the growth of industry in M.orocco.  - 2 - l-i Morocco's natural resources and physical advantages give strength and variety ( to the economy and provide potential for development. Its climate is in gi:!neral • favorable t.o agriculture, particularly with irrigation; it has numerous mineral deposits, including virtually inexhaustible amounts of rich phosphate rock; a.nd it is relatively well equipped with modern transport, power and other facilities. Its variety of natural resources offer considerable opportunity for industries process- ing and transforming raw materials. ' Moreover, its pop,ila.tion of' 12 million, often concentrated in large towns, constitutes a. potential market for manufactured goo a..~ that is yet to. be fully exploited. Since world war II, a nu~ber of modern indus- tries have been established by Moroccan and foreign, mainly French, investors. In recent yea.rs, the Government, aware of the importance of a favorable investment climate, has introduced a number of financial and fiscal incentives and offered selective t8,j_~iff protection to new industries. One of its measures to encourage economic growth. was the establishment of the BNDE in mid-1959, with power to employ B. variety of investment techniques: it can grant long and medium-term loans, d.is- -~ount medium•. term credits made by commercial banks; establish enterprises on its • own initiative; take equity participations; and offer guarantees. BNDE is owned by both Moroccan and foreign investors,. Its share capital is now DH 20 million (US$4 million equivalent), and °t'f.lll be increased to DH 30 million. IFC will subscribe to DH 7. 5 million of the new share issue. The remainder will be taken up by two of BNDE's present stockholders, the Moroccan Government which will subscribe to DH 2 million and the Morgan Guaranty International Banking Corporatiun which, subject to the approval of the Board of Governorr; of' the Federal Reserve System, will subscribe to DH 0.5 million. Although the Government was· initially the main shareholder, it has pursued a policy of selling its shares to other in- vestors and BNDE's stockholders alrea.d¥ include important financial institutions in Belgium, France, Germany, Italy and the United States. After the distribution • ,.. - 3 - of the new share issue, the Government will be in a mindtity position and both the • Government and IFC a.re making arrangero~nts to sell part of their shares to Moroccan. private investors. BNDE has establishe:d itself in the Moroccan business community, and has already made an impact on tl1e development of the Moroccan economy. From its inception in mid-1959 to June 30, 1962, BNDE made 23 direct loans amountir ;; to :nH 63 million. It haa assisted both public and private enterprises in establishing new plants or ex- panding existing ones in the fields of electric power, transport, agriculture, tex- tiles, food and beverages, chemicals, leather, paper, petroleum, refractory mater- ials, car and truck assembly and other metal.lurgj.cal plants. By September 1962, BNDE' s total medium and long-term resources amounted to al- most DH 100 million (US$20 million) which included share capital, reserves and bor- row~a funds. As a result of the world Bank loan and the proposed capital increase, 'BNDE' s resources will be increased to nH 185 million ( $37 million) which should fui·- • nish it with enough funds for its investment operations. until about the end of 196i.~. BNDE's profits have been developing satisfactorily; up to now they have been put into reserves. The World Bank loan was si€71ed in Washington today. It was made to the Banque Nationale pour le Developpement Economique and is guaranteed by the Kingdom of Morocco. The loan will be operated as a line of credit and will be committed, in parts, :'or individual projects to be agreed upon from time to time by the Bank an.d BJ\IBE. The repayment of each pa.rt of the loan will be in semi-annual installments over not more than 15 yea.rs according to a schedule tailored to the needs of the project, and determined at the time of the cotnrnitment. Interest will. be applied to each part of the loan at thG World Bank's rate current when such part is committed i'or one of BNDE's projects. • IFC '· s investment will: ·consist of DH pected to be in January 1963. 7. 5 million of common stock of BNDE. subscription will be made upon completion of the necessary legal formalitjes, ex- The