Document of THE WORLD BANK FOR OFFICIAL USE ONLY Report No: 19101 -MOR IMPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO FINANCIAL MARKETS DEVELOPMENT LOAN Loan Nos. 39280-MOR and 39281-MOR April 9, 1999 Private Sector Development and Finance Department Middle East and North Africa Region This document is for limited distribution. Recipients may only use it in performance of their official duties, and its contents may not be released without authorization by the World Bank. CURRENCY EQUIVALENTS as of 03/29/1999 Currency Unit = Dirham (DH) DH1.00 = US$ 0.1033 US$1.00 = DH 9.6775 ABBREVIATIONS AND ACRONYMS BAJ Barnamaj al Aoulaouiyat al Ijtimaiya (social priority program) BAM Banque Al-Maghrib (Central Bank) BCP Banque Centrale Populaire BMCE Banque Marocaine du Commerce Exterieur BNDE Banque Nationale pour le Developpement Economique CDG Comite Caisse de Deip6t et de Gestion CDVM Comite Deontologique des Valeurs Mobilieres (securities commission) CEN Caisse d'Epargne Nationale CIH Credit Immobilier et H6telier CIMR Caisse Interprofessionelle MVarocaine de Retraites (pension fund) CMR Caisse Marocaine des Retraites (pension fund) CNCA Caisse Nationale de Credit Agricole CNSS Caisse Nationale de Securite Sociale (pension fund) CSE Casablanca Stock Exchange DAPS Direction des Assurances et de ia Prevoyance Sociale IMF International Monetary Fund OPCVMs Organismes de Placement Collectif de Valeurs Mobiliers (mutual funds) PEP Plancher d'Effets Publics PSPEs Private sector and public enterprises RCAR Regime Collectif d'Allocation de Retraite (pension fund) SAL Structural Adjustment Loan SBVC Societe' des Bourses de Valeurs de Casablanca SFI Specialized financial institutions SNI Societe' Nationale d 'Investissement TCN Titres de Creance Negociables (debt instruments) MOROCCO FISCAL YEAR July 1 - June 30 Vice President: Kemal Dervi~ Country Director: Christian Delvoie Acting Sector Director: Deane Jordan Task Team Leader: Denis Chaput FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO FINANCIAL MARKETS DEVELOPMENT LOAN Loan Nos. 39280-MOR and 39281-MOR Table of Contents PREFACE ................................ EVALUATION SUMMARY ................................................................... ii PART I: PROJECT IMPLEM ENTATION ASSESSMENT ...............................................................1 A. Statement/Evaluation Of Objectives.1 I B. Achievement of Objectives.2 C Major factors affecting the project .6 D. Bankkperformance.7 E. BoroerfroPerformance.7 F. Program Sustainability.8 G. Assessment of Outcome.8 Hl. Key lessons Learned and Future Financial Sector Reforms.9 PART II: STATISTICAL TABLES ............................................................... 10 A. Standar d tables. .........................................................................1 Table s: Summaty of Assessments .1................................................................... 1 Table 2: Related Bank Loans/Creditsn.13.. al.Sector. Reforms..................... ......................... 13 Table 3: Projed Timetable ................................................................... 14 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (US$ million) .............................................. 14 Table 5: Project Costs and Financing ................................................................... 14 Table 6: Key Indicators for Project Implementation ................................................................... 15 Table 7: Key Indicators for Project Operation .............5...................................................... I Table 8: Status of Legal Covenants .................................................................... 16 Table 9: Bank Resources: Staff Inputs ................................................................... 17 Table 10: Bank Resources: Missions .......................................................... . ....... 17 B. Sector-specific data ............................................................ 18 APPENDIX: BORROWER'S CONTRIBUTION TO THE ICR This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank aulthorization. - i - IMPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO FINANCIAL MARKETS DEVELOPMENT LOAN Loans Nos. 39280-MOR and 39281-MOR PREFACE This is the Implementation Completion Report (ICR) for the Financial Markets Development Loan (FMDL) to the Kingdom of Morocco, comprising a package of two loans -- Loan No. 39280-MOR (denominated in US$) and Loan No. 39281-MOR (denominated in French Francs)--totaling US$250 million equivalent. The FMDL was approved on July 25, 1995 and made effective on August 31, 1995. The ICR was prepared by Ms. Leila El Hafi (Consultant) under the supervision of Mr. Denis Chaput, Principal Financial Sector Specialist in the Middle East North Africa Region. Preparation of this ICR was begun during the Bank's final supervision/completion mission, December 15-19, 1997 and was updated in August 1998. The report is based on material in the project file and on an evaluation report sent by the Direction du Tresor of the Kingdom of Morocco. - 11 - IMPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO FINANCIAL MARKETS DEVELOPMENT LOAN Loan Nos. 39280 & 39281-MOR EVALUATION SUMMARY Introduction Since the mid 1980s, Morocco has followed a two-pronged approach to financial sector reform. Reforms initially centered on liberalization of a largely controlled banking system and on monetary policy, introducing greater central bank independence, more stringent supervision, and prudential regulations. More recently, efforts have been focused on the development of capital markets. The pace of reform has been largely determined by concomitant progress in fiscal adjustment and other structural reforms. The Bank has supported these efforts through the Financial Sector Development Project (FSDP) of 1991, and subsequently through the Financial Market Development Loan (FMDL). The FMDL totaled US$ 250 million equivalent. This amount consisted of two loans: a fixed- rate US-dollar loan of US$ 125 million (39280-MOR), and a fixed-rate French-franc loan of FRF 600 million (3928 1-MOR), which at negotiations was equivalent to US$ 125 million. The loans became effective on August 31, 1995, on which date a first tranche consisting of a blend of US$ and FRF was released in an amount of US$ 150 million equivalent. A second tranche of US$ 100 million equivalent was released on October 31, 1996. Due to changes in the US$/FRF exchange rate, total disbursements under the adjustment operation amounted to approximately US$ 242.6 million. Project objectives The major objectives of the Financial Markets Development Loan were to deepen Morocco's financial markets and to establish a market-based financial system. The financial market was largely a bank-based system in which domestic capital markets played almost no role in supplying long-term capital to the private sector. The Government was channeling a large share of bank deposits and medium-and long-termn institutional savings to secure the Treasury borrowing requirements at administered-below-market interest rates, and Morocco's domestic savings rate was significantly below that of countries which had achieved high rates of investment and growth. To increase the overall rate of domestic savings and private investment, further reforms were deemed necessary to develop domestic financial markets, along with other macroeconomic measures. These policy measures represented a continuation of the financial sector reform that Morocco had launched in the late 1980s, and which the Bank had supported through the 1991 Financial Sector Development Project. - Hi - The four project components related to policy were: * Treasury financing at market terms through an increase of liquidity in public securities and strengthening of secondary markets for T-bonds, elimination of fiscal incentives on Treasury bonds, and strengthening of the public debt management system. * Indirect monetary control through the introduction of base rates by Bank Al-Maghrib (BAM, the central bank) and elimination of the ceiling on lending rates. * Capital markets development through reinforcement of the legal and accounting framework, and implementation of a series of measures to bring the markets into compliance with international standards. * Banking sector measures related mainly to privatization and the creation of a foreign exchange market, which would lay the foundation for convertibility of the dirham. Implementation experience and Results This loan had 'a satisfactory impact on the stock exchange, Treasury financing, banking supervision, and indirect monetary policy, but its benefits on private sector financing were incomplete. 1. Treasury financing/reduction of public sector's preferential access to savings By implementing FMDL measures, the Treasury would be more dependent on market mechanisms to finance its borrowing requirements. The following keys measures were implemented: * Fiscal incentives to purchase Treasury bonds were eliminated. * Access to the T-bonds auction market was gradually broadened to include, since 1995, all economic agents, residents and nonresidents. While only banks may submit bids on their own account as well as for customers, the list of participants eligible to submit bids on their own account was extended in August 1996 to include insurance companies, pension funds, and mutual funds. * The maturity structure of short-term as well as medium- and long-term bonds was simplified. * BAM established, in January 1996, a clearing and settlement system for secondary market transactions in Treasury bonds. * Treasury began, in March 1996, to reduce the premium on bonds issued to nonfinancial residents over bills sold through auctions, in order to unify the market for Treasury bonds. * In June 1998 an "Arrete" of the Minister of Finance eliminated the plancher d'effets publics (PEP, the mandatory holding of Government securities) after different phases of reduction of mandatory placements. - iv - In spite of these reforms, government financing continues to absorb a large part of medium and long-term loanable funds from the banking system. Thus, with 25 percent of commercial bank assets in government securities, the abolition of the plancher d 'effets publics still has not led to sufficient resources being made available for lending, including medium and long-term lending to the private sector. The supply of investment credit remains relatively scarce and the large demand for housing finance still represents the greatest potential for expanding the banking market. 2. Indirect monetary control The following measures aimed at setting up an indirect monetary policy: * Elimination of ceilings on lending rates in February 1996; all banks were required to display a prime rate. * Introduction by the Central Bank in June 1995 of weekly repurchase auctions as the main channel for bank rediscount. Banks could also enter into five-day repurchase agreements at rates exceeding those of the repurchase auctions. * Shifting, in September 1996, of the Bank reserve requirement calculation from a weekly and monthly basis to a daily average over a period of one month. This provided banks with greater flexibility in managing their liquidity and encouraged money market operations. In spite of these measures, bank lending rates, and short-term rates in particular, are still rigid. Yields on government securities do not act as proper benchmarks for pricing loans and deposits since they do not fully derive from market-based practices. The current auction mechanism gives rise to a mainly administered and segmented allocation of Treasury securities, while rates of return are not validated by an adequate volume of secondary market activity, which includes a significant proportion of repurchase agreements transactions as opposed to outright sales and purchases. Secondary market activity is severely hampered by the proliferation of non- homogeneous instruments, caused mainly by the primary market auction rules. 3. Banking sector The liberalization of banking activity has been accompanied by new prudential regulation in line with international standards; this regulation was also properly extended to other credit institutions such as leasing and consumer finance companies: Strengthening of bank supervision. New classification of non-performing loans and loss provisioning regulations were adopted in May 1993, followed in July 1993 by the requirement for independent audits. Provisioning reached 75 percent of required levels at the end of 1995, and full compliance by all banks was expected to be reached in the financial statements for 1996. FMDL in 1996 strengthened bank supervision rules concerning banks' foreign exchange transactions. Beginning July 1996, specialized financial institutions (SFIs) became subject to capital adequacy and risk concentration ratio rules. * Bank privatization. Banque Marocaine du Commerce Exterieur (BMCE) and Societ Nationale d'Investissement (SNI) were privatized in 1995. Banque Nationale pour le - v - Developpement Economique (BNDE) was offered for sale in 1996/1997. The restructuring plan for Credit Immobilier et H6telier (CIH) was adopted in 1997. * Establishment of a foreign exchange market. The minimum provision of DH100,000, required for opening non-resident Moroccan accounts in foreign currencies, was eliminated in 1995, and the foreign currency account limits for exporters of goods and services were increased from 10 and 5 percent, respectively, to 20 percent under the FMDL. BAM in 1996 issued regulations establishing an interbank foreign exchange market in which banks are authorized to deal, among themselves and with their clients, foreign currencies against foreign currencies, and foreign currencies against the dirham in the domestic market. BAM issued standards for the accounting treatment of bank foreign currency operations in 1996. 4. Capital market development The Casablanca stock exchange index was up by 49.3 percent in 1997, after rising 30.6 percent in 1996. The market capitalization reached DH 118.7 billion in 1997, or 37.4 percent of GDP. The exchange has modernized its stock trading system by introducing electronic quotes and allowing the most active securities to be traded on a continuous basis. A central depository started its operations in the autumnn of 1998. Morocco set up the institutional structure for regulation of the securities market. It consists of a securities commission, the Comiti Diontologique des Valeurs Mobilieres (CVDM), a stock exchange, the Casablanca Stock Exchange, and a central depository, Maroclear. The measures listed below show the significant measures that were conditions of the FMDL: * Establishment in 1994 of the CDVM to supervise market functioning and ensure compliance with the new regulations; privatization of the Casablanca Stock Exchange in 1995. * Operational upgrades to CDVM; first formal annual report in 1996. * Issuance of comprehensive decrees and regulations implementing the new Stock Exchange Law in 1993, and defining the framework of operation for mutual funds and equity funds in 1995, 1996, and 1997. * Implementation of accounting framework for mutual funds in 1996. * Presentation of Law on Corporations to the Parliament in 1996. * Implementation of an action plan (and approval of related legislation) creating a central depository system for securities traded on the stock exchange in 1996, of a trade settlement and delivery system in 1997, and of an automated quote system in 1998. . Approval by the Prime Minister in 1996 of rules governing the National Council for Accounting. * Elimination in 1996 of Government guarantee on domestic bond issues by public enterprises. * Enactment in 1995 of the law on accounting rules to be applied by insurance companies, and issuance in 1996 of a decree by Minister of Finance setting accounting rules for insurance companies. - vi - * Fiscal neutrality of mutual funds, implemented in 1996. * Launching in 1996 of study and action plan on the status and potential role of institutional savers in the development of financial markets. * By August 1996, 13 brokerage firms and 18 mutual funds have been approved. Most of these have been set up by banks, which are no longer allowed to directly operate on the stock market. In spite of these achievements and favorable market conditions, which until now have insulated the Casablanca Stock Exchange from the recent bear market trends around the world, there have been almost no initial public offerings of shares by private non-financial enterprises, if those which were privatized through the CSE are excepted. The total amount of securities issues, mostly debt instruments, has been dropping since 1995. Future operations and key lessons learned The key lessons learned through the FMDL are the following: * A continuous long-term partnership with the Government pays off. The Bank should continue with this approach for future operations on contractual savings which deepen already initiated reforms. The Contractual Savings and Development Loan that was signed in June 1998 was developed by the Bank and the Kingdom of Morocco to improve the accumulation and allocation of long term savings and guarantee the long term sustainability of the country's pension system. This operation as well as previous ones reflect a continuum of efforts made by the Moroccan Government and the Bank to tackle the key issues for the reforms in the financial sector. The Bank and the Moroccan Government have realized the need for such an ongoing long-term partnership to ensure the success in the implementation of a sequence of deep structural reforms. Such reforms cannot be achieved in one shot and require constant monitoring and update. Thanks to these efforts, some important distortions have been removed from the financial system. The banking system operates according to internationally recognized norms and standards. It is healthy and has suffered no major crisis, a record few countries enjoy. Most of the regulatory and policy reforms are in place to develop the capital market as a main source of long-term capital for private investment. In sum, Morocco has made substantial progress toward building a modern financial sector. * However, the Bank needs to be more realistic in the assessment of the feasibility of certain policy measures. For example, the privatization program that was initially foreseen as part of FMDL conditions was too ambitious, probably because of insufficient financial and institutional analysis and/or of an optimistic assessment of the political constraints on privatization. A more rigorous approach would require a careful assessment of the different constraints and risks for each measure included in the loan. That would prevent the Bank from having to use the waiver solution when implementation of measures fails. Eventually, the Bank needs to be more rigorous in its monitoring and supervision, to better anticipate the risk of non compliance with required conditions. - I - IMPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO FINANCIAL MARKETS DEVELOPMENT LOAN Loan Nos. 39280-MOR and 39281-MOR PART I: PROJECT IMPLEMENTATION ASSESSMENT Introduction 1. Since the late 1980s, Morocco has launched a series of financial sector reforms which aimed at developing a healthy, modem, and competitive financial sector within the context of an economic program based on strengthening the private sector and maintaining a stable macroeconomic framework. The first set of reforms focused on the liberalization of banking activities and modernization of the regulatory framework. Among the key reforms undertaken, and which the Bank supported through the 1991 Financial Sector Development Project (FSDP), are the elimination of direct credit control; the introduction of a revised banking law with new and more stringent prudential regulation and supervision applicable to all banks, including state- controlled specialized credit institutions; and the gradual liberalization of lending rates and reduction of mandatory bank placements. The Financial Market Development Loan (FMDL) continued and extended these reforms to include the development of capital markets as a major source of long-term financing for enterprises. 2. The FMDL totaled US$ 250 million equivalent. This amount consisted of two loans: a fixed-rate US-dollar loan of US$ 125 million (39280-MOR), and a fixed-rate French-franc loan of FRF 600 million (39281-MOR), which at negotiations was equivalent to US$ 125 million. The loans became effective on August 31, 1995, on which date a first tranche consisting of a blend of US$ and FRF was released in an amount of US$ 150 million equivalent. A second tranche of US$ 100 million equivalent was released on October 31, 1996. Due to changes in the US$/FRF exchange rate, total disbursements under the adjustment operation amounted to approximately US$ 242.6 million. A. Statement/Evaluation Of Objectives 3. The FMDL was designed to support the second phase of the financial sector reform program of the Moroccan Government. The long-term objectives of this program, initiated in the mid 1990s, were to: (a) establish a market-based financial system, free of any significant distortion in the allocation of financial resources; and (b) develop the domestic capital market as a main supplier of long-term capital for investment. In line with this program, the FMDL targeted four components of the financial sector (Treasury financing, monetary controls, capital markets, banking system), with the objectives of: (a) introducing market mechanisms for Treasury financing and developing an efficient market for government securities; (b) developing the money market and facilitating the shift to indirect and market-based monetary controls; (c) diversifying financing sources for private companies and deepening capital markets; and (d) - 2 - further liberalizing the banking system and strengthening the prudential, regulatory, and supervisory framework. 4. Based on these objectives, the specific policy measures supported by the FMDL mainly concerned: (a) reform of Treasury financing, including the removal of mandatory placement ratios for banks of Treasury bonds at below-market rates; (b) strengthening of the Central Bank's indirect monetary control instruments and liberalization of all lending rates; (c) issuance of several decrees regarding the stock exchange and mutual funds; and (d) privatization of the state- owned banks and establishment of an interbank foreign exchange market, together with related prudential measures. 5. The FMDL was consistent with the Country Assistance Strategy (November 23, 1993), the 1994 Private Sector Assessment (PSA), and the Bank's private sector development (PSD) program, the core objective of which is to achieve higher private investment and private sector growth necessary to accelerate the rate of overall economic growth. The FMDL came at the forefront of the Bank's multi-year PSD lending program' because further liberalization of the financial sector and the deepening of domestic financial markets were necessary to achieve higher private investment and savings levels. Furthermore, the development of capital markets was essential to support the ongoing privatization program and the private financing of infrastructure. 6. The principal rationale for the loan was to enable the Government to accelerate the program of financial sector reforms by financing the temporary fiscal cost associated with its implementation. The use of the Bank lending instrument to smooth out the incremental budgetary expenditures entailed by the reforms was a relevant option in the absence of better alternatives, namely additional taxation or additional domestic borrowing. Raising import tariffs or export taxes, the main option to rapidly increase fiscal revenues, would have had distortionary effects such as discouraging private investment. Domestic borrowing was not favorable due to weak liquidity in the government securities market and to the absence of an active secondary market. B. Achievement of Objectives 7. All conditions for Board presentation were met by the Government of Morocco. Among the key measures adopted prior to release of the first tranche were: * Treasury financing. (a) Reduction of the mandatory bank deposits (plancher d 'effets publics, PEP) in Treasury bonds from 25 to 20 percent; (b) introduction of new negotiable government securities; and (c) elimination of fiscal incentives on Treasury bonds. * Monetary controls. The Central Bank established the framework for its intervention in the money market, namely introducing repurchase agreements and introducing open market transactions at market rates. The FMDL was the first loan of a US$600-700 million multi-year private sector development (PSD) lending program scheduled for FY 96-98. - 3 - * Capital markets. Issuance of the first series of decrees on the regulatory framnework for the stock exchange and mutual funds. * Banking system. Privatization of Banque Marocaine du Commerce Exterieur (BMCE) and Societe Nationale d'Investissement (SNI) and first measures aimed at liberalizing foreign exchange transactions. 8. Release of the second tranche was made possible with the waiver of two of the six loan conditions, namely (a) elimination of the mandatory Treasury bond placement ratio (PEP); and (b) the offering for sale of Government shares in two state-owned banks, BCP and CIH. This release was based on the President's memorandum dated October 30, 1996, which otherwise assessed satisfactory overall progress in the reform program, and approved the waiver of the conditions as described below: * The full elimination of the PEP required for the second tranche release was waived upon request of the Moroccan Government for the following reasons: it was no longer consistent with fiscal stabilization objectives, given an unexpected expenditure increase in the 1996/97 budget to cover arrears in the state-run pension scheme (see above). The Government informed the Bank that, as a result, the PEP would be completely eliminated in the 1997/98 budget, about a year later than originally planned. This proposed timetable was respected with the issuance in June 1998 of a decree by the Minister of Finance eliminating the PEP (see table below). Mandatory holdings * 1990-1997 Today Reduction phase Plancher d'effet public (minimum portfolio of BTs, 35% (1990) Eliminated introduced in 1967) 33.5% (January 1991) (June 1998) 32% (July 1991) 25% (June 1993) 20% (May 1995) 10% (September 1996) 5% (December 1997) * Mandatory holdings ratios are calculated as a % of bank liabilities, mainly sight deposits. * The offer for sale of BCP was waived on the grounds that BCP's charter needed to be amended as a precondition for sale. Although the related draft legislation was put on the agenda of the Council of Government on June 3, 1997, it was not discussed. The draft legislation took longer to prepare than originally anticipated because of the complexity of the changes required to disentangle the ownership of the Government in the head office from the regional cooperatives. The draft now must be approved by the Government, thus clearing the way for privatization. The draft legislation sets the new status of the BCP, the proportion of shares that will be introduced on the stock market, and the management structure and organization. The offer for sale of CIH was waived because the deterioration of its portfolio (due to a major unforeseen downturn in tourism in 1995) made its short-term privatization unfeasible. A restructuring plan was adopted by the CIH board in July 1997, and the DH 6 billion debt related to its tourism portfolio was rescheduled. Some hotel resorts might be sold to foreign investors. These measures should improve CIH's situation and therefore its prospects for privatization. 9. In line with the actions required by the FMDL, shares of BNDE were offered for sale on two separate occasions, but the offerings were unsuccessful. The first offer was launched in late 1996, but the three potential buyers offered less than the asking price of DH 156 per share. The second offer took place in May 1998 on the basis of DH 190 DH per share. There were no serious potential buyers and the operation failed. The Government is now thinking about a different marketing approach. 10. The measures required for the release of the second tranche were implemented except for the waivers described above. These measures are detailed as follows: * Improved Treasury financing. The program's objective was to enable the Treasury to finance itself competitively at market rates. This has been achieved through implementation of the policy measures agreed upon in the loan, including reduction of the PEP, adoption of legislation on negotiable securities, introduction of new regulations by the Central Bank on the maturities and tender features of Treasury bonds, and training of the Direction du Tresor staff in debt management techniques. * Indirect monetary control. The program aimed at the implementation of indirect monetary control policy by the Central Bank through interest rate liberalization, establishment of new rules for Central Bank intervention in the money market, and its reserve requirement policy. All related measures have been implemented. * Capital market development. The program's principal objective was to enhance capital market development, improve transparency of the market and its participants, and create the conditions for an active capital market to be used as a source of corporate finance. The measures stipulated in the loan policy matrix relating to capital market reform have been adopted, including a second series of laws and regulations on the stock exchange and mutual funds. In line with this objective, a draft law on corporations (societes anonymes) aiming at modernizing the legal framework of the companies and facilitating their access to the capital market was adopted. * Banking system. The main program objectives were to complete the bank privatization scheme and establish a foreign exchange market. The bank privatization condition was not achieved. The offer for sale of shares of Banque Centrale Populaire (BCP) and Credit Immobilier et H16telier (CIH, the housing and tourism bank) were actually waived upon request of the Moroccan government and the waiver was approved by the Bank on October 1996. The Banque Nationale de Developpement Economique (BNDE) was also one of the banks that had to be privatized. Its privatization was not waived at that time since following a first but unsuccessful share offering, it was expected that the next privatization attempt would be more promising. The other policy measures relating to the banking sector were - 5 - implemented: they included namely; the issuance of a circular detailing the functioning of the new foreign exchange market, its accounting standards and risk exposure requirements; and the adoption of two decrees by the Minister of Finance: one relating to prudential regulations on the foreign currency exposure, and the other to the harmonization of prudential regulations for banks and specialized financial institutions. Other policy actions. The Government took an important action, which anticipated the future reform program of the financial sector, by paying part of its contributions-to the pension fund for civil servants (Caisse Marocaine des Retraites) at an additional expense of DH 1 billion (about US$120 million). This represented the first step in the forthcoming reform of contractual savings. 11. Macroeconomic framework (see table 7). Macro-economic objectives have been partially achieved. Real GDP growth in 1997 dropped by 2 percent due to poor weather conditions, after a strong recovery year in 1996 (+12 percent). Agricultural growth fell by 26 percent while growth in the nonagricultural sector almost stagnated at 3.3 percent. Prudent monetary policy and marginal increases in import prices contributed to keeping inflation very low: 1 percent of GDP in 1997. 12. The overall budget deficit increased to -3.6 percent of GDP in fiscal year 1997/98, from 3.5 percent in 1996/97. If privatization receipts are included, the budget deficit increased to -3.2 percent in fiscal year 1997/98 from -2.0 percent in 1996/97. Government revenues and expenditures in fiscal year 1997/98 increased by 2 percentage points each, to 24.3 and 28.7 percent of GDP, respectively, due to higher tax revenue and greater expenditure on the wage bill. The wage bill increased from 10.68 percent in 1996/97 to 11.3 percent in 1997/98 after the "social dialogue" between the Government and the unions. Exceptional revenues received from state enterprises, such as dividend payments, helped contain any budgetary slippage. 13. The evolution of the Moroccan economy in 1996 pointed to a sharp improvement compared to the previous year: real GDP grew by 12 percent (-7.6 percent in 1995); the current account deficit turned out to a current account surplus of 0.4 percent of GDP (against a deficit of 3.5 percent in 1995). The budget deficit including privatization receipts fell to -2 percent in fiscal year 1996/1997 after reaching -5.2 percent in 1995. Agricultural production, which increased by 78.8 percent, accounted for most of this favorable GDP perforrnance. Revenue performance (up by 12 percent over 1995) benefited from an anticorruption campaign, while the level of overall expenditures remained basically unchanged; recurrent expenditures rose by 4 percent - largely on account of a 8 percent increase in wages and salaries - while capital expenditures fell by 14 percent. 14. The ratio of foreign debt outstanding to goods and services exports has improved globally from 191 in 1995 to 164 in 1997, reaching therefore the targets required by FMDL. This improvement is mainly due to the decrease in the foreign debt stock, and also to a slight increase in exports of goods and services. This progression had a positive effect on the current account which was in line with the FMDL targets from 1995 to 1997. -6 - 15. Most of the project monitoring indicators are globally satisfactory: * Treasury bonds auctions reached 50.3 percent of total domestic Treasury debt in 1996, 15 points above target and their amount has more than trebled between 1994 and 1997. * The stock market soared between 1995 and 1997: the market capitalization reached DH 118.7 billion in 1997, or 37.4 per cent of GDP, against DH 50.8 billion and 17.9 per cent in 1995. This performance is far beyond what was estimated in the indicators required by FMDL (23 per cent ratio in 1997). * Interbank market rates became more steady and started fluctuating in the limits of the spread set up by the Central Bank. Interbank market rates have not deviated significantly too much from the central bank advances' floor rate since the maximum spread between the central bank advances' floor rate and the average interbank rate shifted between 1.4 per cent and 1.8 per cent, below the indicator of 2 per cent. * The market has been slower than expected in introducing corporate bonds. So far, there were no private non-financial corporate bonds issues in Morocco: the targets were respectively DH 2 billion and DH 4 billion for 1996 and 1997. D Private investment rose from 16.1 per cent of GDP in 1995 to 17.2 per cent in 1997, however these rates were below the levels expected from FMDL indicators in 1996 and 1997 (16.0 per cent and 17.5 per cent). In line with this evolution, gross fixed capital formation hardly picked up and remained low at 20.7 per cent in 1997, against a target of 22.8 per cent. * Gross national savings to GDP ratio increased from 17.3 per cent in 1995 to 20.4 per cent in 1997. In 1995, it was 2.2 points below expectation, this gap against the target required under FMDL monitoring shrunk in 1997 to 0.1 point only. C. Major factors affecting the project 16. Two main risks were associated with the loan program. The first was related to the fiscal sustainability of the reform program. The risk was that an increase in the budget deficit would exert pressure on interest rates, with the possible outcome of reestablishing administrative controls on interest rates and credit allocation in order to contain Treasury borrowing costs. The budget deficit actually deteriorated from 2.2 percent of GDP in 1992 to 3.2 and 5.2 percent in 1994 and 1995, respectively. Most of this deterioration should be attributed to the adverse climatic conditions. To restore economic balances, the Government has already initiated measures to raise public savings, including tax reform policies, a limitation in the increase in the Government's wage bill, and an acceleration of the privatization program. In fiscal year 1997/98 the budget deficit, including privatization receipts, represented -3.2 percent, which did not meet the 2.5 percent expected by FMDL. This was due to actual privatization receipts being below the budgeted amounts. 17. The second risk had to do with the financial condition of banks potentially being jeopardized by the risk associated with freeing lending interest rates and financial resources for lending. In addition, the establishment of a foreign exchange market could have exposed the economic agents to risk-taking operations with which banks had no previous experience. Consequently, banks' portfolios would have become more vulnerable and, given the higher degree of competition in the market, banks would have been forced to incorporate higher - 7 - provisioning requirements and, hence, lower profitability ratios. This risk did not materialize. In fact, the risk exposure of Moroccan banks is relatively limited, and credit expansion in recent years has been moderate. The commercial banks are currently in a position of significant liquidity, with liquid assets representing more than 41 percent of their total balance sheet. The exposure of Moroccan banks to exchange risk is also limited since less than 1 percent of loans and banks deposits are denominated in foreign currency and the banks have foreign exchange positions well below prudential limits. Furthermore, the profitability of commercial banks improved over the period 1993-1996, while that of the specialized banks, the Caisse Nationale de Credit Agricole (CNCA) in particular, deteriorated sharply. It is important to note, however, that the enhanced profitability of commercial banks was due mainly to the abolition of the PEP, and thus to the increase of the relative weight of loans on the banks' balance sheets. D. Bank performance 18. The Bank's performance was globally satisfactory. Project preparation took about 18 months until Board approval. During this phase, the Bank correctly diagnosed the areas of the sector that needed development, and identified in most cases good solutions. The appraisal phase involved teams with economists specialized in the Moroccan financial sector, the IMF, and the Moroccan Government. The appraisal team was proactive, and organized a seminar on "Capital Markets Development" for the Government. Supervision missions visited Morocco regularly. 19. The FMDL project was selected as one employing current best practices in the use of performance monitoring indicators, as highlighted in the Monitoring and Evaluation Plans in Staff Appraisal Reports Issued in Fiscal Year 95, Report 15222. 20. However, the original project objectives were only partially achieved. Having a more realistic assessment at appraisal would have avoided the waiver of conditions about one year after the loan was made effective. CIH and BCP's privatization conditions were waived to allow the release of the second tranche. A more detailed analysis of the particular legal form of BCP would have indicated that privatization of BCP would require substantial changes, making the achievement of this condition very unlikely in the timeframe of this project. The feasibility of privatizing CIH also should have been assessed more carefully, since CIH, unlike a typical commercial bank, also fulfills social and economic development functions in the areas of social housing and tourism infrastructure programs. Similarly, BNDE's privatization could have been tackled more aggressively during the Bank's supervision. The major reason for the failure of the different privatization attempts might also be due to a problem of valuation of assets and liabilities in the transfer process to the private owners. E. Borrower Performance 21. The Borrower's performance was in general satisfactory. The Moroccan Government participated actively and showed very good cooperation at each supervision. Moreover, the Government's contribution to the completion report constitutes a fair assessment of the loan outcome. 22. However, the Borrower could not meet two of the six loan conditions and requested a waiver. The request for waiver was explained by different factors, the major one being the severe -8 - drought that affected the Moroccan economy. The Government finally implemented one of the conditions that was waived - the elimination of the PEP - but not in the scheduled timeframe. 23. The audit of the first tranche SOE was qualified due to potential double counting of an amount equal to US$8 million. The audit of the second tranche was also qualified due to duplicate and ineligible claims for an amount of US$8.5 million. As a result, the Borrower submitted replacement documents which were accepted by the auditors and the Bank. Audits for the tranche statements of expenditures (SOE) were eventually satisfactory. F. Program Sustainability 24. The program sustainability is likely if we consider the continuous dialogue between the Bank and the Moroccan authorities. The Financial Sector Development Program in 1991 was laying the basis for further reforms in 1995 with the FMDL. The achievements of the FMDL were deemed satisfactory enough to launch the reforms of the contractual savings and to agree on a Contractual Savings Development Loan in 1997. So, the reforms supported by the FMDL have been reinforced and consolidated since 1995. Nevertheless, in spite of favorable trends and significant measures that modified deeply the functioning of the financial sector, further financial sector reform is still needed to increase the financial sector contribution to economic growth. G. Assessment of Outcome 25. Overall, the FMDL project is rated satisfactory. The Bank loan was committed expeditiously and met with substantial disbursement success. The project achieved the stated objectives within an acceptable level of success. The implementation of the FMDL policy measures gradually reduced direct Government intervention in the banking sector and reinforced the role of market forces in the allocation of financial resources; improved the capacity of financial institutions to mobilize domestic savings; enhanced the effectiveness of monetary policy instruments; contributed to reducing the crowding out of financial resources by the Government; and promoted competition among banks while strengthening their financial soundness. Morocco now has a healthy commercial banking system and an emerging capital market, both of which are necessary for the development of a modem and productive private sector. 26. Nevertheless, in spite of the elimination of the mandatory placement by banks of government bonds (the PEP), and the creation of a system of govenment security dealers, activity in the secondary market remains thin. One of the objectives listed in the policy matrix was to increase the liquidity of government securities and to strengthen the secondary market for the T-bonds. This objective seems partially fulfilled. This mechanism led to an interest rate structure that remains partly administered. The lack of activity in the secondary market as well as distortions in government bonds' pricing are caused mainly by deficiencies in the auction mechanism which leads to a proliferation of thinly-capitalized-single issues of government bonds. Eliminating the PEP was certainly a step towards a more market based process but a thorough review of the auction mechanisms and of the instruments used is still needed to bring about an efficient government securities market. - 9 - 27. There was significant progress in the capital markets following legal and regulatory measures conducted under the FMDL. However the capital markets development has not offered a sufficient diversification of financing sources for private companies. Over the recent years, there has been no initial public offering (IPO) by a private non-financial firm on the Casablanca stock market, either in the form of marketable debt instruments or as an increase in share capital. The growth in market capitalization has been due primarily to rising share prices. It reached DH 118.7 billion in 1997, or 37.4% of GDP. As regards to the supply of bank credit, commercial banks have significantly increased their lending to the private sector, from about 44% in 1992 to more than 65% of total lending by the end of 1997. H. Key lessons Learned and Future Financial Sector Reforms 28. The key lessons learned through the FMDL are the following: * A continuous long-term partnership with the Government pays off. The Bank should continue with this approach for future operations on contractual savings which deepen already initiated reforms. The Contractual Savings and Development Loan that was signed in June 1998 was developed by the Bank and the Kingdom of Morocco to improve the accumulation and allocation of long term savings and guarantee the long term sustainability of the country's pension system. This operation as well as previous ones reflect a continuum of efforts made by the Moroccan Government and the Bank to tackle the key issues for the reforms in the financial sector. The Bank and the Moroccan Government have realized the need for such an ongoing long-term partnership to ensure the success in the implementation of a sequence of deep structural reforms. Such reforms cannot be achieved in one shot and require constant monitoring and update. Thanks to these efforts, some important distortions have been removed from the financial system. The banking system operates according to internationally recognized norms and standards. It is healthy and has suffered no major crisis, a record few countries enjoy. Most of the regulatory and policy reforms are in place to develop the capital market as a main source of long-term capital for private investment. In sum, Morocco has made substantial progress toward building a modern financial sector. * However, the Bank needs to be more realistic in the assessment of the feasibility of certain policy measures. For example, the privatization program that was initially foreseen as part of FMDL conditions was too ambitious, probably because of insufficient financial and institutional analysis and/or of an optimistic assessment of the political constraints on privatization. A more rigorous approach would require a careful assessment of the different constraints and risks for each measure included in the loan. That would prevent the Bank from having to use the waiver solution when implementation of measures fails. * Eventually, the Bank needs to be more rigorous in its monitoring and supervision, to better anticipate the risk of non compliance with required conditions. - 10- IMPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO FINANCLAL MARKETS DEVELOPMENT LOAN Loan Nos. 39280-MOR and 39281-MOR PART II: STATISTICAL TABLES A. Standard tables Table 1: Summary of Assessment Table 2: Related Bank Loans/Credits Table 3: Project Timetable Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual Table 5: Project Costs and Financing Table 6: Key Indicators for Project Implementation Table 7: Key Indicators for Project Operation Table 8: Status of Legal Covenants Table 9: Bank Resources: Staff Inputs Table 10: Bank Resources: Missions Non applicable standard tables: Studies Included in Project (none) Economic Costs and Benefits (n/a) Compliance with Operational Manual Statements (n/a) B. Sector-specific data Graphs Graph 1: Market Capitalization (in million dollars) in 1997 Graph 2: Market capitalization / GDP in 1997 Graph 3: Number of listed companies in 1997 Graph 4: Market Capitalization in Casablanca Stock Exchange - 1997 Graph 5: Casablanca Stock Exchange General Index - 1997 Graph 6: Turnover Ratio (%) in 1997 Graph 7: Financial Market Deepening Ratio M2-currency/GDP Tables: Table 1: Emerging Stock Markets, 1997 Table 2: The Casablanca Stock Exchange, 1994-1997 Table 3: Market Capitalization by Industry Table 4: . Privatizations through the Casablanca Stock Exchange, 1993-1997 Table 5 : Evolution of interest rates, 1994-1997 Table 6: Debt instruments issuers as of December 31, 1997 A. Standard tables Table 1: Summary of Assessments A. Achievement of Objectives Substantial Partial Negligible Not applicable (1/) (V) (V () Macro Policies E] / Sector Policies E, En Financial Objectives E E E Institutional Development E Cl I Physical Objectives E E El Poverty Reduction E E El Gender Issues E E El Other Social Objectives E E El Environmental Objectives E E El Public Sector Management E E El Private Sector Development E El El Other (specify) E El El" -12- (Continued) B. Project Sustainability Likely Unlikely Uncertain (/) (/) (V) v F~l E] Higl B. Bank Performance satisfactory Satisfactory Deficient (V) (/) (/) Identification E lII Preparation Assistance ] izi Appraisal ] 5 Supervision E El Highly C. Borrower Performance satisfactory Satisfactory Deficient (/) (0) (1/) Preparation a [l Implementation El E/l Covenant Compliance El Operation (if applicable) El Highly Highly D. Assessment of Outcome satisfactory Satisfactory Unsatisfactory unsatisfactory E El) El () Table 2: Related Bank Loans/Credits Loan/credit title Purpose Year of approval Status Preceding operations 1. Loan 28060-28067 Increase exports through intermediation loans, 05/05/87 Closed on 12/31/95 Industrial Export Finance and improve export promotion and appraisal US$170 million capacities of the borrowing banks. 2. Loan 30010 Further structural adjustment through tax 12/01/88 Closed on 12/31/89 Structural Adjustment I reform, strengthened public investment, trade US$200 million liberalization, and improved debt management. 3. Loan 31360-31367 Support private sector economic diversification 12/05/89 Closed on 06/30/96 Industrial Finance and exports through intermediation loans US$170 million 4. Loan 33650-33730 Strengthen the financial sector and move 06/25/91 33650: Closed on 06/30/93 Financial Sector Development towards indirect monetary control; support 33660: Will close on 12/31/98 US$235 million private sector through intermediation loans 33670-33730: Closed on 12/31/97 5. Loan 34630 Consolidate structural reforms through public 04/30/92 Closed on 12/31/93 Structural Adjustment II expenditure switching, external trade reform, US$275 million and the development of social sector strategies Following operations 6. Loan 43400-43401 Improve the mechanism of long-term savings 06/09/98 43400: Will close on 12/31/98 Contractual Savings Development I mobilization and allocation through the reform 43401 : Will close on 12/31/98 US$100 million of contractual savings institutions. - 14 - Table 3: Project Timetable Steps in Project Cycle [ Date Actual Identification February 8-17, 1994 April 27-May 12, 1994 September 26-October 6, 1994 Pre-appraisal October 31-November 11, 1994 Loan Committee April 28, 1995 Appraisal and negotiations June 12-24, 1995 Letter of Development Policy June 27, 1995 Board Presentation July 25, 1995 Signing August 1, 1995 Effectiveness August31, 1995 First Tranche Release (if applicable) August 31, 1995 Second Tranche Release Novemnber 12, 1996 Loan Closing June 30, 1998 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (US$ million) FY96 FY97 Total Appraisal Estimate 150.00 100.00 250.00 Actual 150.09 92.60 242.69 Actual as % of Estimate 100.06 92.60 97.08 Date of Final Disbursement Novemnber 30, 1996 Table 5: Project Costs and Financing Item/Source Appraisal Estimate (US$ million) Actual/Latest Estimate (US$ million) 1. First Tranche 150.00 150.09 2. Second Tranche 100.00 92.60 TOTAL 250.00 242.69 Of which: IBRD 250.00 242.69 Table 6: Key Indicators for Project Implementation Indicators monitored under the FMDL Financial and Private Sector Development Indicators 1994 1995 1996 1997 estimated Actual estimated actual estimated actual Macro - Financial Indicators - Private domestic investment"1/GDP (%) 16.1 15.0 16.1 16.0 15.9 17.5 17.2 - Gross national savings/GDP (%) 19.3 19.5 17.3 19.8 20.0 20.5 20.4 Capital markets - Treasury bonds auctions/Total Treasury domestic debt (%) 20.1 25.0 25.7 30.0 40.3 35.0 50.3 - Issues of corporate bonds (DH billion) 0.0 0.0 0.0 2.0 0.0 4.0 0.0 - Market capitalization/GDP (%/0) 14.6 17.0 17.9 19.0 23.5 23.0 37.4 Indirect Monetary Control - Central Bank advance rate/interbank rate maximum spread (%) NA 2.0 1.5 2.0 1.4 2.0 1.8 1/ Includes Public Enterprises. Source: Ministry of Finance and Bank estimates. Table 7: Key Indicators for Project Operation Macroeconomic Framework -- Selected Indicators 1994 1995 1996 1997 Estimated Actual Estimated Actual Estimated Actual (in Percent) Non- agriculture GDP Growth 2.6 | 2.7 2.3 3.2 3.5 | 3.6 3.3 Foreign Debt Outstanding/XGS1' | 210 | 221 192 j 200 173 | 182 163 (As share of GDP) l Current Account - 2.4 -3.5 -3.6 -2.9 0.3 -2.8 -0.2 Budget Deficit2' -3.2 -3.5 -5.2 -3.0 -2.0 -2.5 -3.2 Fixed Capital Formation 20.7 21.2 21.4 22.0 19.4 22.8 20.7 1/Includes workers' remittances. 2/ Includes Privatization receipts. Data for 1996 are FY96/97. Source: Ministry of Finance and Bank estimates Table 8: Status of Legal Covenants Agreement Section Covenant Present Original Revised Description of Comments type status . fulfillment fulfillment Covenant date date Audit 3.03 (a) 1 CD 06/30/96 Sound maintenance of accounts Audit 3.03 (b) I C 06/30/96 Audit of accounts in (a) The audit for the first tranche statement of expenditures (SOE) was qualified due to potential double counting for an amount equal to US$8 million. The audit of the second tranche was also qualified due to duplicate and ineligible claims for an amount of US$8,5 million. As a result the Borrower submitted replacement documents which were accepted by the Audit and the Bank. Flow 3.02 3 C Procurement, as per Schedule 3 Flow Schedule 3 C Withdrawal of the Proceeds of the I loan Flow Schedule 3 C Interest and Principal repayment 2 provisions Flow Schedule 3 C Procurement, as per World Bank 3 guidelines Flow Schedule 10 CP 03/04/1996 Actions referred to in Paragraph 4(b) The second tranche was released in 11/96 based on a memorandum 4 of Schedule I to this Agreement of 10/30/96 from the President recommending release with waiver of (conditions for 1I tranche release) two of the six specific actions included in Schedule 4 of the loan agreement namely: a) the elimination of bank mandatory Treasury bond placement ratio (PEP), and b) the issuance of offers for sale of government shares in two state owned banks, BCP, and CIH. The PEP has been eliminated in June 1998, and privatization has not been implemented yet for BCP, and CIH. Review 3.01 (a) 9 C 03/04/1996 Exchange of views or progress of actions under project Review 3.01 (b) 9 C 03/04/1996 Progress report to be submitted to the Bank Covenant types: Present Status: 1. = Accounts/audits 8. = Indigenous people 2. = Financial performance/revenue generation from 9. = Monitoring, review, and reporting C = covenant complied with beneficiaries 10. = Project implementation not covered by categories 1-9 CD = complied with after delay 3. = Flow and utilization of project funds 11. = Sectoral or cross-sectoral budgetary or other resource CP = complied with partially 4. = Counterpart funding allocation NC = not complied with 5. = Management aspects of the project or executing 12. = Sectoral or cross-sectoral policy/ agency regulatory/institutional action 6. = Environmental covenants 13. = Other 7. = Involuntary resettlement - 17 - Table 9: Bank Resources: StaffInputs (Thousands of US$) Stage of Project Cycle Planned Revised Actual Weeks US$ Weeks US$ Weeks US$ Preparation to Appraisal n/a n/a 212.8 694.8 Appraisal-Negotiations n/a n/a 4.4 31.8 Negotiations through Board Approval n/a n/a 7.4 31.2. Supervision n/a n/a 57.5 196.9 59.9 199.5 Completion n/a n/a 7.0 25.2 2.0 5.4 TOTAL n/a n/a 64.5 222.4 286.5 962.8 Table 10: Bank Resources: Missions Performance Rating Number Specialized Implemen- Develop- Stage of Month/ of Days in Staff Skills tation ment Types of Project Cycle Year Persons Field Represented Status Objectives Problems Through appraisal: Ist Mission 02/94 4 8 TM, E, F 2nd Mission 05/94 6 12 TM, E, F 3rd Mission 09/94 2 8 TM, E 4thMission 11/94 7 10 TM,E,F,L Appraisal through 06/95- 5 10 TM, E, F, L _ _ Board Approval 08/95 Supervision 04/96 5 8 TM, E, F S S OLC 06/97 3 3 TM. E S S OLC Supervision/Completion 12/97 2 6 TM. F S S Legenda: Skills represented: TM Task Manager E Economnist F Financial Specialist L Lawyer Types of problems: OLC Other legal covenants - 18 - B. Sector-specific data Graph 1 Maiket Capitalization (in million dolias) in 1997 70,000 60,000 40,000 120,000 _ _ 10,000 laMer- * Jordn Tunisia 0 2 4 6 8 10 12 Graph 2: Market capitalization / GDP in 1997 100% 90% 80% _ 70% 60% ' 50% ~'' 10% * In lieu of 1997 GDP, 1996 GDP was used. - 19 - 10$ 143 139 160 1401 74 120- 100 ~~~~~~~~~~34 80- 60 - 40 20] Graph 4: Market Capitalization in Casablanca Stock Exchange - 1997 140,000 40 120,000 35 1Ou00,000 30 12 .t 0i;0 i-0 - 0 00;tX t0 - ;;i -.-iL'; ..ijjj 2 SSj$21ti i/ !In million dirhams 80,000 25 +- %of GDP 20 60,000 15 40,000 0 20,000 0 0 1992 1993 1994 1995 1996 1997 - 20 - Graph 5: Casablanca Stock Exchange Gene ral Index - 1997 800 - - 60 700 50 600 500 40 General Index 400 \ * * 30 +-Change in index(%) 300 20 200 10 Io I _-o 0, 0 1992 1993 1994 1995 1996 1997 t}Iungaiy- _- - g ;~~~~~~~~~Taian E Mgyptorocco Graph 7: Financial Market Deepeniing 120% rRatio M2-culrmncy/GDP l 00%_ Thailand! 80%, --- -- = 60% Egypt MoroccoI 400/% | 40% F ~~~ ~ ~ ~ ~- - ~~ - ~ ~~ ' ~ * Tunisia 20% l ._-_ 1991 1992 1993 1994 1995 1996 1997 L~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -21 - Table 1: Emerging Stock Markets, 1997 Market Trading Value Change in Number of Turnover Capitalization (in million index in listed Ratio (%) (in million dollars) dollars (%) companies dollars). Africa 280,971 53,546 1,810 included: Egypt 20,830 5,859 18.0 650 33.5 Morocco 12,177 1,048 37.8 49 10.0 Tunisia 2,312 285 -47.0 34 8.7 Latin America 609,710 299,435 2,267 included: Argentina 59,252 25,702 17.3 136 49.5 Columbia 19,529 1,894 24.1 189 10.3 Venezuela 14,581 3,858 23.2 91 31.3 Asia 872,673 2,136,268 11,513 included: Korea 41,881 170,237 -69.4 776 188.4 Indonesia 29,105 41,650 -74.2 282 69.3 Thailand 23,538 23,119 -80.0 431 37.5 Eastern Europe 183,138 44,071 2,593 included: Russia 128,207 16,362 142.7 208 19.8 Hungary 14,975 7,684 60.9 49 75.9 Poland 12,135 7,977 -18.5 143 77.7 Western Europe 136,219 101,502 675 included: Turkey 61,090 59,105 109.9 257 129.7 Portugal 38,954 20,932 43.6 148 65.8 Middle-East 146,802 66,898 1,079 included: Kuwait 25,888 170,237 36.9 74 144.9 Jordan 5,446 501 11.8 139 10.0 Total 2,229,513 2,701,720 - 19,937 - Source: IFC, World Bank Table 2: The Casablanca Stock Exchange, 1994-1997 1994 1995 1996 1997 Market Capitalization In million dirhams 39 825 50 780 75 583 118 666 % of GDP 14,0 18,3 23,9 37,4 Trading value (in million dirhams) 8 648 23 201 20 357 32 334 Stocks 7 235 20 713 18 063 27 658 Government bonds and other securities 1 406 2 484 2 127 4 638 Other 5 4 22 38 Share of Market Capitalization Share in value traded by of 10 most traded stocks ( 85 87 88 77 Number of listed companies 61 44 47 49 Total Dividends distributed (in million dirhams) 968 1 245 1 713 2 086 Total Dividends/Total Market Capitalization 2,43% 2,45% 2,27% 1,76% Casablanca Stock Exchange General Index 342,33 342,39 447,13 667,52 Change in index (%) 31,78 0,02 30,59 49,29 Source: Casablanca Stock Exchange Company Table 3: Market Capitalization by Industry In million dirhams Change in % Share in % 97/96 1996 1997 1996 1997 Banking 26 928 37 793 40% 35,6 31,8 Holding companies 16 542 25 745 56% 21,9 21,7 Food 9 651 15 523 61% 12,8 13,1 Oil and Mining 6 028 8 944 48% 8,0 7,5 Building Material 5 552 15 468 179% 7,3 13,0 Sugar Industry 3 206 2 955 -8% 4,2 2,5 Consumer Credit 2 673 5 500 106% 3,5 4,6 Metal Industry 1 306 2 126 63% 1,7 1,8 Others 3 728 4 612 24% 4,9 3,9 Total 75 614 118 666 57% 100% 100% Source: Casablanca Stock Exchange Company Table 4: Privatizations through the Casablanca Stock Exchange 1993-1997 Companies Sector Privatization Shares % Price per Number of Privatization Number of Date Offered share shares Gross revenue shares offered allocated (in Million subscribed Dirhams) SAMIR Oil refinery 17-mars-96 30,00 243 6 192 450 1 505 10 975 751 BMCE Banking 24-janv-95 14,01 325 1 401 000 455 8 533 127 SONASID Steel 14-juin-96 35,00 308 1 365 000 420 2 235 041 SNI Holding 01-nov-94 15,63 300 1 203 678 361 7 456 924 CIOR Building materials 21-dec-93 34,00 230 715 700 165 5 505 613 SMI Metal 17-juin-97 20,00 396 329 018 130 3 637 163 FERTIMA Chemicals 07-mars-96 30,00 174 690 000 120 3 077 567 CTM-LN Transportation 03-juin-93 40,00 250 337 224 84 1 540 447 EQDOM Consumer credit 27-juin-95 18,00 360 200 000 72 691 168 CTM-LN Transportation 05-oct-94 18,46 280 174 100 49 448 138 SOFAC Consumer Credit 05-avr-94 18,37 290 137 775 40 541 500 GENERAL TIRE Tire Manufacturing 15-fevr-95 20,00 228 126 000 29 1185 600 Total 3 430 * Source: Ministry of Privatization Table 5 Evolution of interest rates (1) Annual rates in % Money Market rates Dec. 1994 Dec. 1995 Dec. 1996 Dec. 1997 Bank Al-Mahgrib Repos - 7 days 12 7 6,5 6,5 - 5 days nc 8,5 8 8 - 24 hours nc nc 12 12 Interbank Market Weighted Average Rate (WAR) 5,25 7,7 6,85 6,69 End of Month WAR 8 8 6,52 6,74 Deposit banks and other specialized financial institutions Deposit interest rates (Per cent per annum) Dec. 1994 Dec. 1995 Dec. 1996 Dec. 1997 Sight deposits NR NR NR NR Savings Account - National Savings Fund 9 8 8 8 - National Agricultural Credit Institution 7 (miti) 7 (miii) 7 (min) - Banks 7 (mini) 7 (min) 7 (min) 7 (min) Source: Banik Al-Maglirib, An1nual Report NR: Not remunerated Table 5: Evoltitioni of interest r ates (2) Notes and iBondis isstied by The Treastiry Treasc r), bills issued.for I/ihe ;blic l)cc. 1994 Dec. 1995 D1ec. 1996 Dec. 1997 - 6 iioitlis 9,5 9,5 8,5 7,5 - I year 10 10,0 9,0 7,5 -3 years 10,5 10,5 9,5 8 -5 years II 11,0 10,0 8,5 Current account niotes - Required subscription 4,25 4,25 4,25 Eliminiated - Free subscription Market rate Market rate Market rate Market rate 2- year bonds - Moroccans Living abroad 10 10 9,5 8,5 5-y,ear bonds - Capital accounit 9,5 9,5 9 9 - I year-note issued by National Agricultural Credit lIstitutioti 4,25 4,25 4,25 - Noles anid Bonds issued by, Fitancial arici No Fir nancial hIstitdions - 5 year-note 10,5 tic 10 - 7 year-note 10,5 10 10 - 8 year-note NC 10 10 -10 year-note 1 1 10,25 10,25 to -15 year-note I 1 10,5 - 10,5 Coiunmercial paper Free Free Free Source: Bank Al-Maglhrib, Anmiial Report -27 - Table 6: Debt instruments issuers as of December 31, 1997 Type of instruments & Name of the Sector Initial amount Balance as of Issuer (in million December 31, 1997 Dirhams) (in million Dirhams) Certificates of deposits BCP Banking 1 000 BNDE Banking 700 607 CIH Banking 1 500 1 188 MEDIAFINANCE Banking 300 65 SGMB Banking 500 90 WAFABANK Banking 1 110 991 Debt instruments issued by consumer credit or leasing companies ACRED Consumer Credit 250 250 EQDOM Consumer Credit 350 350 MAROC LEASING Leasing 300 108 SOGELEASE MAROC Leasing 300 172 SOMAFIC Consumer Credit 144 144 WAFA IMMOBILIER Mortgage 100 WAFABAIL Leasing 250 218 WAFASALAF Consumer Credit 400 381 Debt instruments issued by other companies MAROCAINE VIE IMMOBILIER Real Estate 70 70 Total 7 274 4 634 Source . Bank Al-Maghrib, Conseil Deontologique des Valeurs Mobilieres APPENDIX: BORROWER'S CONTRIBUTION TO THE ICR APPENDIX Page 1 of 7 IMPLEMENTATION COMPLETION REPORT ON THE CAPITAL MARKET DEVELOPMENT PROJECT CONTRIBUTION OF THE BORROWER Unofficial translation of the French version INTRODUCTION I - With a view to continuing the reform of its financial sector, Morocco concluded a loan agreement with the World Bank in August 1995. This reform, which deepens the one undertaken with particular emphasis since 1991 with support from the Bank, is part of a far-reaching program designed to promote private sector development. Through the establishment of a capital market founded on market mechanisms, it aims, in essence, to raise savings and investment rates to the levels necessary to achieve strong and sustainable economic growth. 2 - The reform program was implemented in generally satisfactory conditions. Indeed, the macroeconomic framework remained stable and in line with the agreed objectives, except in 1995, when a severe drought caused slippages in the area of government finance and prices. Almost all of the measures were implemented as planned. Only two measures were renegotiated with the World Bank, i.e., removal of the government securities floor (PEP) and the sale of government holdings in the BCP and the CIH. These measures could not be carried out either for exceptional reasons or because the problems involved in their implementation were underestimated. They were not abandoned, however, but merely postponed to a later date (the PEP was removed on June 30, 1998). 3 - Judging by the performance indicators selected for the program, the results of the reform appear to be satisfactory overall. For example, it resulted in the near-total elimination of the privileges enjoyed by the Treasury in respect of financing. Moreover, expansion of the Treasury bond auction market and its improved liquidity enabled the Treasury to strengthen its market-based financing and obtain better terms. The reform also facilitated the diversification of financial instruments, particularly as a result of the establishment of a market for negotiable debt securities (TCN) and the creation of mutual funds. Similarly, modernization of the stock market brought about a substantial improvement in the performance of the market, the capitalization of which increased sharply. However, the reform has yet to produce all of the expected effects in terms of the development of alternative financing. The direct financing instruments created as part of the reform (corporate paper and bond issues) have so far been little used by businesses. APPENDIX Page 2 of 7 I CAPITAL MARKET DEVELOPMENT PROJECT: DESCRIPTION AND OBJECTIVES 1 - In the early 1990s, the government launched an initial series of financial sector reforms with support from the World Bank. During that reform phase, the emphasis was on liberalization of the banking system. Consequently, major reforms were undertaken such as the loosening of credit controls, the elimination of selective credit policies, and the introduction of rules on the supervision and prudential management of banks. 2 - Continuing the financial sector reform is part of the government's strategy to develop a competitive economy based more fully on private sector dynamics. It is one component of a broad structural reform program designed to modernize the basic infrastructure, promote professional training, improve the legal and institutional framework of business, and enhance the economy's competitiveness with a view to creating a free-trade area with the European Union. In this context, the objective of the financial sector reform is to increase the rate of savings sufficiently to achieve the level of investment necessary to ensure strong economic growth. This is to be accomplished through the establishment of a modern and efficient financial system operating on market terms, and the development of the capital market as a major source of business financing. 3 - The financial system development project, as described in the Letter of Development Policy sent by the Minister of Finance to the World Bank, covers four areas of intervention: (a) Treasury financing: The measures include increased reliance on market mechanisms for Treasury financing and the creation of a modern infrastructure for the issuance of Treasury bonds. The mandatory Treasury bonds-to sight deposits ratio of banks was reduced from 35 percent to 25 percent in the first phase. To improve private sector access to credit and accelerate the development of the domestic financial market, it should be eliminated altogether. (b) Monetary control: The Central Bank should pursue an indirect policy to control the monetary aggregates. Refinancing rates in the banking system will be determined on the basis of the reference rates recently introduced by the Central Bank. The transmission of these rates within the banking system will be facilitated by the liberalization of lending rates, which will also give the banking system greater latitude in granting credit to the private sector. (c) Capital markets: Following modernization of the legal framework in 1993, the implementation of a regulatory framework should be continued. An infrastructure adapted to the needs of a rapidly developing market should also be put in place. The objective will be the harmonization of the Moroccan securities market with international standards. (d) Banking system: The measures will aim, among other things, at continuing the privatization of the banking system and the establishment of a foreign exchange market as the first step toward an exchange rate based on market mechanisms and, in the medium term, the convertibility of the Dirham, as soon as the prerequisites for this are satisfied. 4 - The loan obtained from the World Bank will be used to finance the temporary cost to the budget of implementing the program of reforms and, in particular, removal of the government securities floor. The loan, amounting to US$250 million, can be disbursed in two tranches. The first, totaling US$150 million, will become available once the modalities for the entry into force of the loan agreement have been fulfilled. Disbursement of the second tranche of US$100 million, is subject to the implementation of a APPENDIX Page 3 of 7 certain number of specific measures and the attainment of progress satisfactory to the Bank in executing the program of reforms as a whole. II. PROJECT IMPLEMENTATION 1) Macroeconomic context: Despite severe droughts in 1995 and 1997, the macroeconomic context has remained stable overall. In fact, GDP, following a significant increase of 10.4 percent in 1994, fell 6.6 percent in 1995, before expanding 12.1 percent in 1996 and then decreasing 2 percent in 1997. This unstable growth, reflecting developments in the agricultural sector, had some impact on the growth of nonagricultural GDP, the annual rates of which were slightly below the rates projected for 1995 and 1997, i.e., 2.3 percent and 3.3 percent, respectively, compared to the initial estimates of 2.7 percent and 3.6 percent. The underlying equilibria continued to improve following the problems caused by the drought in 1995. Consequently, the Treasury deficit, which stood at 5.2 percent of GDP in 1995, amounted to 2 percent in FY 1996/1997 and 3.2 percent in FY 1997/1998. Similarly, the external current account deficit, which went from 2.4 percent of GDP in 1994 to 3.4 percent in 1995, showed a surplus of 0.4 percent of GDP in 1996, before posting,a slight deficit of 0.3 percent in 1997. However, the fact remains that the slump in business activity in 1995 and its impact on the state budget were at the root of the renegotiation of a specific program measure, namely, total removal of the PEP. 2) First-tranche measures 1 - The measures for the first tranche of the loan, or, rather, those upon which presentation of the project to the Executive Board of the World Bank depended, have all been implemented. These measures, grouped according to the areas of intervention of the reform, are the following: a) Treasury financing: i) Reduction of the PEP from 25 percent to 20 percent of bank liabilities: this measure was implemented by decree of the Minister of Finance in May 1995, the objective, of course, being to ensure Treasury financing on market terms; ii) Elimination of tax incentives for Treasury bonds: this measure was introduced in the 1994 finance law, which, beginning in 1995, eliminated the exemption granted individuals for the interest earned on subscriptions to loans issued or guaranteed by the Treasury. The objective was to harmonize the tax treatment of government and private financial instruments; iii) Reform of the T-bond auction market: this reform was implemented by the decree of the Minister of Finance of January 23, 1995 and the BAM implementing circular. The aim was to open this market to all investors, increase its transparency, and promote the emergence of a secondary market. The main adjustments introduced at this level are: - Admission to the market of any individual or legal entity, resident or nonresident; - Dissemination of a quarterly issuing calendar as well as auction results; APPENDIX Page 4 of 7 - Standardization of the securities issued, which were previously of only 3 types: short-term bonds (13, 26, and 52 weeks), medium-term bonds (2 and 5 years), and long-term bonds (10 and 15 years); - Introduction of the technique of assimilation, which allows for the formation of bond pools, thereby promoting the emergence of a secondary market; - Designation of Treasury securities dealers, responsible for managing the auction market. iv) - Adoption of the law on negotiable debt securities: this law was adopted and promulgated by Dahir of January 26, 1995. By instituting a negotiable debt securities market, this law made it possible to expand the range of investment instruments offered to investors and to develop a number of sources of alternative financing. This law, as well as the implementing provisions adopted in July and October 1995, specifies the modalities under which this market will operate, the securities that can be issued on it, the conditions governing access to the market, and the rules necessary for its security and transparency. Three types of securities can be issued on this market: - The 10-day to 7-year certificates of deposit that banks can issue; - The 2- to 7-year finance company bonds that can be issued only by finance companies authorized to receive funds from the public at a term of more than 2 years; - The 10-day to 1-year corporate paper, which only companies can issue. b) Indirect control of credit: i) Publication in June 1995 of a Central Bank circular setting forth the conditions of its intervention on the money market. This circular replaced the former means of intervention, based in particular on automatic, fixed-rate refinancing, with indirect instruments designed to impact the monetary aggregates through indirect money market rates. The new, indirect instruments introduced by this circular are the following: - One-week Central Bank repurchase operations at a rate constituting the floor (currently 6 percent); - Five-day bank repurchase operations at a rate constituting the ceiling (currently 7.5 percent); - Twenty-four-hour Bank Al-Maghrib or bank repurchase operations at a rate 4 points above the ceiling (i.e., 11.5 percent); - Open market operations, i.e., outright purchases and sales of Treasury bonds on the secondary market. c) Development of the financial market: i) the publication of an initial series of provisions implementing laws promulgated in 1993 on the stock exchange and mutual funds; ii) Approval in July 1995, by decree of the Prime Minister, of the rules governing the National Accounting Council; iii) Promulgation of the law on the accounting obligations of insurance companies in January 1995; iv) Finalization in June 1995 of the terms of reference for a study on institutional savings; v) Preparation of a CDVM (securities commission) organizational chart in June 1995. d) Banking system: the measures implemented in this area are designed to accelerateprivatizations in the banking sector and create the conditions necessary for the establishment of a foreign exchange market; they are: i) Privatization of the SNI in 1994, followed by the BMCE in 1995; APPENDIX Page 5 of 7 ii) Forwarding of a letter from the Governor, dated July 3, 1995, to the GPBM, announcing the creation of a foreign exchange market and inviting banks to prepare for the establishment of that market; iii) Publication of a circular by the exchange control authorities on July 12, 1995, raising the percentage of earnings from exports of goods and services to be paid into an account in foreign currency from 10 percent and 5 percent, respectively, to 20 percent, and eliminating the requirement of an initial payment of DH 100,000 for nonresident Moroccans to open accounts in foreign currency. 3) Second-tranche measures: 1 - The second-tranche measures were implemented in accordance with the program, except for two measures included in the specific conditions, i.e., removal of the PEP and the sale of government holdings in the CIH and the BCP, which could not be carried out because of unforeseen negative factors or because the problems involved in implementing these measures were underestimated. In fact, as explained in the letter sent by the Minister of Finance to the Bank on September 25, 1996, removal of the PEP in 1996, given the widening of the Treasury deficit in 1995 as a result of the drought and the effect it had of increasing the FY 1996 debt burden, would have further expanded the deficit for that fiscal year. As for the other measure, it should be pointed out that the government's holdings in the CIH could not be sold within the time frame established by the program because of the need to restructure that agency's portfolio following the crisis in the tourism sector in 1995. Lastly, the sale of government holdings in the BCP proved not to be possible until after passage by congress of the legislation amending that institution's charter. At the request of the Minister of Finance and with the approval of the World Bank, these measures were eased as follows: - Instead of eliminating the PEP in 1996, reduce it another 5 points in September 1996 and agree to remove it entirely under the 1997-1998 finance law; - Formulate a CIH reorganization plan aimed at improving its financial position instead of selling the government's interest, as originally planned; - Advance the process of approving the reform of the new BCP charter instead of selling the government's interest in that institution's capital. 2 - Subject to the above modifications, all of the specific measures were implemented. They consisted of the following: i) Reduction of the PEP from 20 percent to 15 percent in January 1996 and then to 10 percent in September 1996. ii) Elimination of the loan rate ceiling by decree of the Minister of Finance in February 1996. This full-scale liberalization of interest rates is aimed, among other things, at improving the access of SMEs to financing by promoting bank competition and allowing banks to set their own rate based on the degree of exposure. iii) Passage of the draft law on corporations by the House of Representatives in July 1996. The aim of this law is to modernize the legal framework of corporations by increasing the transparency of their management and facilitating their use of the capital market. iv) Publication in March 1996 of a circular from the exchange control authorities and of the corresponding BAM implementing circulars, with a view to the creation in June 1996 of an interbank exchange market. Banks participating in this market were authorized to carry out transactions in foreign currency against dirhams among themselves and with customers, and were free to determine exchange rates within the band defined by the Central Bank. This market also affords banks the opportunity to develop exchange risk hedging instruments. APPENDIX Page 6 of 7 v) Sale of government shares in the capital of BNDE and formulation of a CIH reorganization plan. Reform of the BCP charter is currently in the process of being approved. 3 - All of the other 2nd_tranche measures were implemented, with the exception of one related to the law on the preparation, publication, and certification of consolidated financial statements, which could not be carried out owing to the lack of the requisite technical assistance. Among these measures, particular mention should be made of the following:. - With regard to monetary policy, publication of a BAM circular dated September 10, 1996, simplifying the method of determining the monetary reserve by authorizing banks to calculate the amount of that reserve an on average daily basis. - In respect of the financial market: i) publication of a second set of provisions implementing the laws on the Securities Exchange and mutual funds (see appendix and Annex 2). ii) Elimination of the government guarantee for public enterprise bond issues. The CNME was notified of this measure by the Ministry of Finance on January 16, 1996; iii) Formulation, with the support of the French consortium SBF-SICOVAM, in May 1996, of a plan of action designed to strengthen the institutional and regulatory framework of the Securities Exchange; iv) Establishment of accounting rules for insurance companies by decree of the Minister of Finance on May 8, 1996; v) Finalization in September 1996 of a plan of action to promote institutional savings. - Regarding the banking system: i) Publication in April 1996 of circulars on the creation of the foreign exchange market and pertaining more specifically to the modalities under which that market will operate, the determination of exchange positions, the professional guidelines to be followed by participants, and the definition of accounting standards applicable to foreign exchange operations carried out on that market. ii) Harmonization of the prudential rules (risk-spreading coefficient and capital-debt ratio) for banks and former OFSs (BNDE, CIH, and CNCA) by decree of the Minister of Finance dated July 23, 1996. HI - ASSESSMENT OF THE RESULTS OF THE PROJECT 1 - Although it seems premature to assess so broad a reform, it can be said, in regard to the performance indicators selected for the program, that the positive effects of this reform are obvious, especially in the areas of Treasury financing, monetary policy, financial instruments, and the stock exchange. However, the program has not yet produced all of the desired effects in terms of direct financing of the private sector. 2 - In the area of Treasury financing, the reform led not only to increased financing of the Treasury on market terms, but also to improved liquidity in the auction market and lower rates. In fact, the Treasury relied increasingly on the auction market as the stock of T-bonds subscribed by auction more than tripled in the 1994-1997 period, significantly boosting their share of total domestic debt. This result is due partly to the opening of the auction market to new participants, particularly insurance companies and mutual funds, and partly to the improved liquidity of that market following the launch of the secondary market in 1996. Volume on the latter market has expanded steadily since then, amounting to DH 29 billion at end- 1997 and DH 33 billion in the first half of 1998 alone. The growth of the auction market has even enabled the Treasury to benefit from lower rates, particularly since 1997. APPENDIX Page 7 of 7 3 - The monetary impact of the reform is evidenced by the adoption of an indirect monetary policy based exclusively on interest rates. This policy had the positive effect of stabilizing theinterbank market, where rates have moved within the fluctuation band defined by the Central Bank's reference rates. Rates on the interbank market are therefore not far from the BAM floor, insofar as the spread between these two rates has remained below the limit established in the program. This policy also made it possible to control the money supply, the growth of which has generally conformed to the monetary authorities' objectives. It should be noted, however, that intervention by the Central Bank has so far not included open market operations. 4 - The effect of the reform on the stock market was to significantly improve its performance, as clearly demonstrated by the trend of the major stock market indicators. Thus, stock market capitalization in the 1994-97 period almost tripled, going from DH 40 billion in 1994 to DH 119 billion in 1997. Expressed as a percentage of GDP, it amounted to 37 percent in 1997, compared to 24 percent in 1996 and 18 percent in 1995, far exceeding the levels envisaged in the program. 5 - The reform also led to the diversification of financial instruments through the establishment of mutual funds and the creation of a negotiable debt securities market. In fact, mutual funds have multiplied rapidly since their official introduction in December 1995. Their number has increased uninterruptedly since then, reaching 54 by end-1997, 35 of them SICAVs and 19 FCPs. The savings collected by these entities have grown considerably. The net assets of mutual funds, for example, which were no more than DH 239 million at end-December 1995, soared to DH 2.7 billion in 1996 and then to DH 10.6 billion in 1997 and nearly DH 17 billion by end-June 1998. The negotiable debt securities market has also experienced major growth since its official launch in January 1996. The first issues on this market occurred in October 1996 and have grown constantly since then. The stock of these securities at end-December 1997 totaled DH 3.6 billion, including DH 1.8 billion in certificates of deposit and DH 1.7 billion in finance company bonds. 6 - However, the reform has yet to produce all of the expected effects in terms of the development of alternative financing instruments. The significant growth of the negotiable debt securities market involved only those instruments issued by banks and finance companies (certificates of deposit and finance company bonds). By end-1997, there had been only one issue of corporate paper by a private enterprise. Similarly, bond issues on the financial market have been limited to companies that used that type of financing before the reform (C.I.H.). Lastly, it should be emphasized that private enterprises have yet to avail themselves of opportunities on the international financial market, even though international rates have fallen substantially and the foreign exchange market created in June 1996 affords exchange risk coverage. The use of all these direct financing instruments could have exerted competitive pressure on the banking system and, in so doing, led it to improve access to financing in the economy as a whole and among SMEs in particular. Signed by: Mr. Abdeltif Loudyi Directeur du Tresor et des Finances Exterieures Ministere de l'Economie et des Finances Royaume du Maroc
Groupe de la Banque mondiale · Implementation Completion and Results Report
Morocco - Financial Markets Development Loan Project
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Groupe de la Banque mondiale
Type de document
Implementation Completion and Results Report
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Maroc
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Banque mondiale