Announcement of the Economic Development of Morocco Published on August 2, 1966

' HOLD. FOR RELEASE • INTERNATIONAL BANK F R RECOl'JSTF~ l /.\ 1818 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTNE 3-6360 Bank Press Release No. 66/43 Subject: "The Economic Development For Publication o{J~orocco" published August 2, 1966 "The Economic Development of Morocco," the repQrt of an economic survey mis- sion organized by the World Bank, has oe~n 1ublt~hed by The Johns Hopkins Press. The mission went to Morocco in 1964, at the request of the Government, to advise the Moroccan authorities on measures needed to maximize economic growth. In the mission's opinion "Morocco faces the future with numerous assets." The country's climate and variety of soilii, ·.:make the prospects fer agriculture promising. It has important mineral resources of phosphates, lead 'and iron; the economic 1 infrastructure -- transport, conmunications, electric energy -- are at an advanced • stage. Morocco's varied attractions, which include a 1,000-mile coastline, offer great possibilities for the development of an international tourist trade. The potentialities for rapid economic advance as represented by these factors, however, must be :1weighed against the problems posed by the pressure of population, a dis- cernible scarcity in the amount of investment funds available, and the urgent ne- c~ssity of modernizing agriculture. Agricultural production for domestic consump- tion has been declining since 1960. The output of mining has increased only frac- tionally during the past few years except for phosphates which have grown rapidly:.~ The mission arrived in Morocco in the spring of 1964 to find the country iacing a serious financial crisis caused by a series of budget deficits and balance of payments problems. The annual cash deficit increased from 325 mil- lion dirhams in 1960 to DH 1.,016 million in 1964. Foreign exchange reserves had •• :9hrunk to $76 million in 19e4 from,$212 million three years earlier • "the 'Economic Development of Morocco," 356 pp. Price $8.50. Available from bookstores and The Johns Hopkins Press, Baltimore, Maryland 21218. • - 2 - The financial situation was symptomatic of the strain placed on the Moroccan 1 economy by an inability to expand output in order to meet the demands of a rapidly increasing population. Output has risen at the rate of only 1.6% a year since 1955 which was only about half the rate of population growth. The slow rate of increase o( output since 1955 has been due both to an inappropriate pattern of total investment and a sharp drop in private investment which has been associated with the emigration of Europeai~d. The mission observed that increasing llpublic expenditure without a proportionate increase in the taxable base" is primarily responsible for the recurrent financial crises that the country has had to en- ::·,.1re in recent years. The mission suggests that economic policy must be con- cerned in the future with evolving a system that will ensure a considerable • augmentation of domestic savings and channel a substantial share of them directly into the public sector. With this objective in view, the mission suggested the main lines of development expenditures for a six-year period, 1965-70. By the time the report was prepared, Morocco had already adopted a Three-Year Plan for -1965:6)\ The mission hopes, nonetheless, that its recommendations will prove useful during the annual reviews of the current Plan as well as in fixing the i/ targets of the next plan for 1968-70. In accordance with its intention "of concentrati11g realistically on the Government's role of prOllloting growth," the report emphasizes that the direc- tion of Government investment is of as great importance as its\~ ~~e. The mission believes that public expenditure must be concentrated on those sectors which are likely to add significantly to the country's earning capacity in the shortest possible time. The report places no "financial limit on expenditure • in agriculture, tourism, mining and industry provided it promises an early and high return."  // • ~/I • - 3 - The mission's proposed plan for, public investment during the next six years envisions a total expenditure equivalent to $1,400 million. Commodity production 0 -and tourism would absorb 53% of this amount. Further, expenditure' on infrastruc- - ;-- \; ture would emphasize expanding the c~J)~C:itf to cater to the anticipated increased demand for electricity while extending the trarisport system modestly. This new nattern of investment, the mission hopes, should result in an over-all annual growth rate of 4% by 1970. The mission felt that the formulation and implementation of development pro- grams must be ~ade more methodical than at present and makes recommendations for administrative re-organization with this end in view. Both at the ministerial ~nd civil servant levels, suggestions are made for institutional arrangements • to ensure that the various interests are taken into account and that various viewpoints obtain a hearing. At the same time, the mission feels that develop- ment progrannning should be under a senior minister who would supervise all acti- vities in the economic field. The report stresses that substantial economies in recurrent expenditures can be realized by a careful watch on the expansion of the government payroll. The employment of foreigners in the government, to fill positions where experience ,_; '1 \,-~ and technical competence has not yet been attained by a sufficient number of Moroccans, is indispensable. Agriculture Agriculture is expect~d to absorb 26% of all public expenditure in the years 1965-70. The task of refashion~ng the traditional agriculture is of great importr ance in Morocco. The level of savings can be raised only if, r":~n,ners I incomes ., assume a marked upward trend; also it is vital to reduce dependence on imports of foodstuffs to conserve foreign exchange. The projected investment should=~ ..... ·o • - 4 - co1,centrated on completing projects which already are under construction and to- ward improving lands which are under cultivation at present. Irrigation activi- ties should be concentrated on bringing into full productive use those lands al- ready served with water, rather than oa:1 embarking on major new engineering works. ~Che mission believes that encouraging results will be:~ obtained by taking steps to extend rural credit and making technical advice available to fanners. Tourism The mission was impressed by the many splendid tcurist attractions that Morocco has to offer. The attractive Mediterranean beaches, the mountain chains, Lhe Roman ruins of Volubulis and the old Portuguese ports on the Atlantic, con- stitute a valuable economic asset which must be fully exploited. Morocco's prox- 1·1 • imity to Euro~,e should enable it to take full advantage of the present expansion of the tourist trade in the Mediterranean area. The mission suggests a target of one million tourists by 1970 and recommends that 6% of total investment be utilized toward extending tourist facilities. The mission anticipates that by 1970 the tourist trade could bring it DH 800 million ($160 million) per year. The mission recommends extension and development of existing tourist locations, thus avoiding additional investment in overheads that wou~~l be necessary in new areas. Development should provide incentives to private ( . enterprise by extending long-term financing at low costs. Collaboration with foreign private investors should be encouraged as foreign capital will bring with it the requisite high-level management and s~~vice ~--,·, staff and help to match inter- ... "- "<>-._ ·. nati,pnal standards in this highly competitive indusC:ry. I; •. l'1 !!i.n!~\ng and Industry \I The report places high priority on increasing production of phosphates and / bringing the Safi fertilizer plant into full operation. Funds were also earmarked .... '. - 5 - • for a second phosphate plant, for sugar milling, mineral exploration and for the i~1,Justrial development bank. The mission felt that the Government should intensi-i.:y its efforts to attract private capital, both domestic and foreign into this field by improving .the business climate and providing incentives such as tax benefits. A supply of skilled manpower is essential for economic development. The mis- sion reconunends that expenditure be concentrated on secondary education and techni- cal training. The mission's program suggests expenditures of DH 243 million ($48 million) in these fields during the 1965-70 period out of a total of DH 486 million f:)r education • .~t~alth and Housing The report stresses that investment in health facilities, both curative and preventive, should be phased in accordance with the increase in the supply of medi- • cal personnel, particularly doctoxs and senior nurses. The majority of doctors at'.d ~~nior nurses are currently foreign, but training programs under way should make it possible for Moroccans to replace these in increasing proportions in coming years. There is an acute housing sh~rtage in the main urban centers. The mission £~els that priority should be given by the Government to eliminating the urgent !1ealth hazards posed by the worst conditions. Public programs should concentrate on providing new facilities for low-income groups. The Government should provide plots of land, laid out with basic utilities, such as water supply, sewage and el~ctricity, while the individuals should have the responsibility of building dwellings upon such plots. The mission points out that all increases in output are likely to be neu- ~ralized unless the rate at which the population is growing is reduced signi- • ficantly. Various measures to inflJ\enc~ the population growth rate are dis- cussed and the report. contains a suggested approach to the preparation of a detailed and comprehensive plan for family limitation.