Morocco - Sixth Banque Nationale Pour Le Developpement Economique (BNDE) Project

CIRCULAtING COPY TO BE RETURNED TO REPORTS DESK DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Not For Public Use Report No. P-1238-MOR REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE BANQUE NATIONALE POUR LE DEVELOPPEMENT ECONOMIQUE OF MOROCCO WITH THE GUARANTEE OF THE KINGDOM OF MOROCCO April 25, 1973 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCY UNIT MROCCAN DIRHAM (DHI) US $1 DH 4.19 DH 1 = US $0.24 DH 1,000 US $240.00 DH 1,000,000 US $240, 00( Fiscal Year - January 1 to December 31  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED SIXTH LOAN TO THE BANQUE NATIONALE DE DEVELOPPEMENT ECONOMIQUE (BNDE) WITH THE GUARANTEE OF THE KINGDOM OF MOROCCO 1. I submit the following report and recommendation on a proposed loan to Banque Nationale de Developpement Economique (BNDE) to be guaranteed by the Kingdom of Morocco, for the equivalent of US$24 million, to help finance lending for industry. Amortization would conform substantially to the aggre- gate of the amortization schedules applicable to the specific investment pro- jects financed out of the proceeds of the loan, with a maximum period of 15 years for individual investment projects. The interest rate would be 7-1/4 percent per annun. PART I - THE ECONOMY 2. An economic report entitled "Current Economic Position and Prospects of Morocco" (EMA-42) was distributed to the Executive Directors in September, 1971. More recent economic information is given below. The next economic mission is scheduled to visit Morocco during the fall of 1973. A country data sheet is attached as Annex I. 3. In the period since independence (1956) the traditional social and political order has been essentially maintained while the economic structure began to change gradually. Traditional subsistence rainfed agriculture still occupies more than half of the active population while a small but growing modern agricultural sector provides a large part of commercial agricultural production. Phosphate mining is the major industrial activity. The relative importance of manufacturing industry which is oriented toward import substi- tution is growing only slowly. Traditional crafts and trades provide substan- tial employment. The fast growing tourism traffic has made tourism the most dynamic sector of the economy. Major constraints to balanced economic growth continue to be the vulnerability of agriculture to drought, low savings, and insufficient dynamism of the private sector, especially in industry. Unemploy- ment in cities and in the countryside is high and there are large differences in cultural and economic levels between regions and population groups. Rapid growth of the population aggravates the problems. Development Policies 4. Following an extended period of quasi-stagnation, the growth of output in most sectors during the present Plan period (1968-1972) eceeded the con- servative Plan targets. Agricultural production increased over 6 percent annually in 1968-71, partly due to a mediocre crop in the base year. But taking more normal periods as a base, average growth of agricultural output has been about 3.5 percent, still above expectations. In 1969 and 1970, medium and large scale manufacturing grew by 8 percent annually but slowed down in 1972. The sector as a whole grew by only 5 percent during the last  five years, slightly more than planned. Mining fell short of the Plan target, largely on account of a slackening world demand for phosphates and also because of depletion of other mineral resources; however, market prospects for phosphates have improved in 1972, and production is expanding with recently completed capacity. Building and public works also fell behind target. Average Annual Growth in Production (in Percent) 1968-1972 1968-1972 Plan Targets Actual Agriculture 2.1 6.0 Energy 5.4 9.0 Mining 7.9 6.4 Industry and Handicraft 4.3 5.4 Building and Public Works 8.5 7.4 Non-government Services 4.6 5.0 Total (government services excluded) 4.3 5.7 5. The political events of mid-summer 1971, following the first attempted coup d'etat, had limited effects on the overall growth rate in that year. In 1972, however, industrial production slackened, while mining and tourism con- tinued to grow. Although the August 1972 disturbances did not seem to affect investment decisions, fixed capital formation, in particular the purchase of new capital equipment, fell in 1972 for the second consecutive year. Growth of total fixed investment is estimated at an annual rate of 3.5 percent over the 1968-1972 period, falling substantially short of the Plan target of 7.8 percent. Fixed investments account now for about 13 percent of GDP instead of 17 percent that had been planned. 6. The objectives pursued by successive governments since independence include: acceleration of economic growth and improvement of living standards; preservation of social and political stability; and promotion of "Moroccani- zation", i.e. a larger share of Moroccan ownership and management in foreign- owned land, commercial and financial companies, and industry. At the same time new foreign investment in industry, tourism and mining continues to be encouraged by the Government. In August 1971 the King stressed several socioeconomic objectives, extension of education and reform of administration. Some measures have already been taken but the coming 1973-1977 Plan is looked to for a more positive application of this new orientation. Total domestic savings remained at 12 percent of GDP which is too low for accelerated deve- lopment. 7. A substant4ai improvement on the external account took place over the last two years as a result of lower imports of investment goods and a jump in phosphate exports, increased tourist activity and larger workers' remittances. The deficit on current account which had attained a $140 million peak in 1970 disappeared in 1972. Disbursements on official loans increased, however, to  - 3 - an estimated $110 million in 1972. There was a net outflow of short term private capital. Reserves increased by $60 million to a level of $240 million at the end of 1972, equivalent to five months' imports of goods. Development Prospects 8. Although the 1968-72 Development Plan has come to an end, a new five-year plan is still being prepared and may not be completed before mid-1973, so that this year may well be a transitional one. However, implementation in 1973 of public projects postponed from 1972 could prevent a further fall in invest- ments. Economic prospects for the next two or three years continue to be overshadowed by current political uncertainties. 9. The immediate need is for an acceleration of public investments so as to stimulate the growth of output and private investments. Morocco's foreign exchange reserves and the improved balance of payments situation can support a significant increase in the level of investment. In the longer run, invest- ments should rise to a structurally higher level than in the past to sustain a growth rate of 2 to 3 percent in per capita production and to alleviate existing unemployment. Investment is forecast to grow by about 7 percent in 1974 and possibly more in future years. Ample investment opportunities appear to exist in tourism, for which Morocco is particularly well endowed, in indus- try through exports to the European Economic Community, in agriculture through completion of irrigation schemes, and in urban development which has been lagging. 10. At the end of 1971, external public debt amounted to $794 million, of which medium-term private credit amounted to 15 percent. Debt service was expected to grow rapidly in 1972 but is still likely to remain below 10 per- cent of exports of goods and services. Assuming continued improvements in exports and no substantial deterioration in the concessionary terms of the aid received, Morocco retains substantial capacity to service additional debt. If these assumptions hold true, the debt service ratio would be expected to rise only gradually reaching about 15 percent by the end of the decade. PART II - BANK GROUP OPERATIONS IN MOROCCO 11. Bank and IDA lending to Morocco amount to $303.1 million (net of cancellations) for 17 projects, of which four were financed under IDA credits totalling $36.8 million. IFC investments amount to $2.4 million. Annex II gives a summary of Bank loans, IDA credits and IFC investments as of March 31, 1973 together with notes on the implementation of ongoing projects, particularly those which are encountering delays. While initial implemen- tation of projects carried out by the Government or its agencies is often slow and can, at times, be very disappointing (see in particular Loan 850-MOR in Annex II) project performance usually improves with the passage of time as has recently happened with two education projects. On the other hand, pro- ject implementation by the three autonomous financial institutions to which the Bank lends (BNDE, CIH and CNCA) is generally satisfactory. 12. The Bank Group program aims at assisting Morocco in the adoption of policies to curtail unemployment, develop agriculture and industry and improve  urban and rural living conditions, and by advising on, and obtaining necessary institutional and sectoral reforms. To achieve these objectives the Bank has concentrated on projects in agriculture (35 percent), education (6 per- cent), industry (30 percent), transportation (5 percent), tourism (8 percent), and urban infrastructure (16 percent). In the future the Bank plans to continue its efforts in the same sectors, but the pace at which this program can be carried out will depend to a large extent on the Government's ability to prepare projects and to take related policy decisions. 13. In the financing of agricultural projects the Bank has so far helped develop Large scale irrigation schemes and agricultural credit of the traditional type. In this connection it has insisted on the importance of efficient organization of the sector, of land reform and of the development of small scale farms. The Government has recently greatly accelerated land distribution and is presently preparing agricultural projects which are directed at small farmers and which are expected to be submitted to the Bank. 14. Education is a critical bottleneck in Morocco's development. Two IDA credits have been made for education and a third project is under pre- paration for later consideration. The first two projects, however, have encountered some difficulties (see Annex II) and presentation of the third is contingent upon continuing improvements in the first two. 15. The financing of industry and tourism has so far been made only through two DFC's (BNDE and CIH). While these DFC's are expected to continue playing the main role in Bank lending in these sectors, the Bank is presently appraising a large phosphoric acid project and is helping prepare a tourism infrastructure project as Executing Agency for a UNDP financed study. Pro- jects in these sectors are primarily helping Morocco enlarge its foreign ex- change earnings but also increasingly enable the Bank to help improve sectoral policies and to encourage the creation of employment opportunities. 16. The first transportation loan was for a highway project and included financing of a sector review which is now serving as a basis for future transport investments as well as recommendations on transport policy. Among the investments recommended in the sector review, a second highway project has already been appraised by the Bank and a port project is being prepared for Bank consideration. 17. The first Bank financing for public utility serving urban infra- structure is the $48 million Water Supply loan signed in July 1972 but not yet effective (see Annex II). A $25 million power project has also been appraised and is expected to be presented soon to the Executive Directors. By means of these two projects the Bank is trying to help the Government to bring about much needed improvements in the organization of the public utility sector. The wider social problems due to the rapid urbanization presently taking place are expected to be tackled more directly through a site and services project which is being prepared with the Bank's assistance. 18. A Consultative Group for Morocco was formed in April 1967. It in- cludes Belgium, Canada, France, Germany, Italy, Kuwait, the Netherlands, Spain, the U.K., The U.S., IMF, UNDP, OECD/DAC, the African Development Bank and the  - 5 - European Investment Bank. The Group last met in October 1971, when it wel- comed the Government's new policies and affirmed continued support for Morocco. The next meeting of the Consultative Group is tentatively scheduled foz the Spring of 1974, when it will consider Morocco's new Five Year Plan (1973-1977). Official foreign assistance to Morocco has shown a rising trend, from a total DH 651 million in 1966, to DH 848 million (of which DH 92 million in grants) in 1971. The major sources of aid were the U.S., Germany, the Bank Group and France. III - THE SECTOR 19. Next to agriculture and tourism, manufacturing has come to be an important sector in Morocco's economy. During the last decade, manufacturing was about 13 percent of GDP despite the pronounced growth of both agriculture and tourism. Banque Nationale pour le Developpement Economique (BNDE) is the sole provides of long term finance for industrial investments, and the Bank, helping BNDE meet its resource needs for import financing through re- peated loans, has made a major contribution to industrial development in Morocco. 20. Growth of industrial production which had been slow in the early 1960's accelerated in the three-year period 1968-1970 to about 6 percent annually. In 1971, output grew only by an estimated 4 percent in real terms, due to adverse political circumstances, and according to current projections, the growth rate may have declined even further in 1972. Growth has been uneven from sector to sector: while building material production increased by 35 percent over the period 1966-1970, metal transformation by 44 percent and textiles by 52 percent, the chemical industry grew only by 13 percent and the shoe and leather industry by 3 percent. 21. Exports of manufactures are relatively recent, import substitution having been the traditional aim of Moroccan industry. Lately, however, the limitation of the domestic market and the opportunities opened by the 1969 association with the European Economic Community have induced the Moroccan industrialists to become more active in the export markets. Exports of manu- factures have increased by about 7 percent annually since 1965 and reached DH 526 million or nearly 20 percent of exports of goods in 1970. Half of these were food products. Non-food manufactured exports were mainly textiles, leather goods, clothing, handicraft and fertilizers. 22. Various weaknesses and problems have prevented a more balanced growth of the manufacturing industry in Morocco. The share of value added in gross output is low, ranging from 14 to 27 percent. In addition, scarcity of managerial and other skills, exacerbated by keen competition for the avail- able talent between the major sectors, impedes a more rapid growth of in- dustry. However, unemployment remains substantial among unskilled workers. Government intervention in the industrial sector has not always been well adapted to solving these difficulties. Extensive controls have had negative effects on private entrepreneurs. To a certain extent this has been compensated by an impressive array of incentives but the response of private industrial investment to the benefits offered has, on the whole, not met expectations.  23. The oriertation of Moroccan industrial policies and related finan- cial incentive measures have been the subject of discussions between the Government and the Bank Group for several years. These talks brought out that there could be advantageous changes in the incentive system which so far had favored capital-intensive investments, and had put little emphasis on pro- moting industrial exports and employment creation. Also the granting of in- centives had been on ad hoc basis by an investment commission and without clear guidance of well defined policy criteria. However, the Bank has recently been informed that new legislation on industrial incentives was being finali- zed. Incentives would be defined selectively according to sectors, geographical regions as well as importance of projects, and greater automaticlty would be applied in granting incentives to investors meeting predetermined criteria within the framework of this selectivity. Furthermore, grants toward invest- ment costs woule b? replaced by income tax exemptions, which are neutral vis-a-vis labor iit.ensive or capital intensive investments. These features embody Bank advice on industrial policy, and the dialogue on further possible modifications is expected to continue. IV - THE PROJECT 24. An appraisal report on BNDE (No. 90a, dated April 11, 1973) is being distributed separately. A Loan and Project Summary, is attached as Annex III. The Bank's fifth loan to BNDE was fully committed against sub-projects in December 1972. The proposes sixth BNDE project was first appraised in January/February 1972, and this appraisal updated in September 1972. Negotiations for L he proposed loan were held in Washington, D.C. on March 20 to 23, 1973. DNDE was represented by Mr. Mustapha Faris, its President and General Manager and Mr. Mansouri, Deputy General Manager, and the Guarantor by Mr. Cheggour, of the Ministry of Finance. BNDEts Objectives and Role in the Economy 25. From its inception in 1959 BNDE has occupied a key position in the Moroccan economy as the only financial institution authorized to provide long- term financing to the manufacturing sector. Recently BNDE has supported 75 percent of all industrial projects approved by the Moroccan Investment Commis- sion, and its financing typically accounts for 40 percent of the total cost of projects. Since there is no alternative source of long-term financing for industry, BNDE's operations representatively reflect the distribution of investments in 4iorocco. In addition, BNDE plays a major role in the alloca-- tion of medium-term finance to industry by appraising and approving loans as they are presented by commercial banks to the Central Bank for rediscount. 26, The average capital cost per job created by BNDE projects under the previous Bank loan is about $9,000 if the investment is below $1.5 million, and $17,000 if the investments is between $1.5 million and $3 million. These figures, while not particularly low, are in line with the capital cost per job in comparable countries despite the bias of exisitng legislation on investment incentives in favor of capital intensive operations. It was agreed during negotiations that BNDE through its follow-up work would measure the impact on employment of projects it finances to serve as feedback and back- ground information for future project appsaisals of BNDE. To improve the  -7- measurement of the economic merits of projects it finances, BNDE has agreed to calculate the effective rate of protection and financial rate of return with and without the incentives granted by the Government. In addition, BNDE will start to calculate the economic rate of return on large projects and it aims at extending the coverage as experience grows. Resources 27. BNDE's share capital, as increased in December 1972, amounts to DH 32.4 million; 56 percent is held by Moroccan public institutions and individuals. IFC has contributed about 17 percent and the remainder has been subscribed to by subsidiaries of foreign institutions resident in Morocco and foreign banks. BNDE's equity including reserves of DH 19 million, amounted to DH 51.9 million at the end of 1972. BNDE plans to have its shares listed sometime in 1973; this operation is likely to be a success in view of the large over-subscription by the Moroccan public to both BNDE's 1973 share increase and January 1973 bond issue. 28. From its inception to 1970, BNDE relied mainly on the Bank and the Government for its resources. As of December 31, 1972, 61 percent of its outstanding resources were Bank funds. Government loans were BNDE's main source of local currency but since 1971 local bond issues have also come to form a new and important source of funds. 29. Foreign resources have come primarily from the Bank, which has lent BNDE nearly $100 million. Until 1970, the only other foreign loan was from USAID ($3 million in 1970). However, with improved income prospects resulting from a recent increase in its lending rate to 9 percent, BNDE is now in a better position to tap foreign sources of capital. The first inroads were made in 1971 and 1972, with a loan from the Banque Nationale de Paris (BNP) for DH 46 million, and a loan of DH 12 million from the Kuwait Development Fund. Alto- gether, foreign borrowings, obtained and under negotiation, in addition to Bank funds, total about $30 million. However, these funds are partly for tied procurement only and BNDE has been reluctant to borrow long-term, untied funds, because the interest rates on such funds have been substantially higher than those it is accustomed to pay. But, given its prospects of profitability, it is the Bank's view that BNDE could afford a rate as hign as approximately its own lending rate on some limited amounts, considering this as a price to pay in order to enter the international capital market. During negotiations it was agreed that BNDE would try to work out a borrowing program to that effect. Management and Organization 30. BNDE's 16-member Board meets about four times a year, sets BNDE's policy and approves all loans. The Board has delegated to an 8-member Executive Committee the power to approve all loans and investment proposals below DH 4 million and to review all operations. On December 18, 1972, Mr. Mustapha Faris, former Minister of Finance, succeeded Mr. M'hamed Bargach, who had been BNDE's President and General Manager since early 1971.  - & - 31. During a good part of 1972 BNDE experienced organizational difficulities, resulting in a deterior-ation in BNDE's financial administration and in the quality of appraisal work. A new organization plan was introduced in September 1972. The staff is now split into two clearly defined groups - the first dealing with legal and administrative matters, financial management and business promotion; the second is in charge of project work such as appraisal, follov-up economic studies and equity investments. Each group is headed by a Deputy General Manager. This isew organization seems to be sensible and should bring an overall improvement of BNDE's work. Although the change is very recent, some improvements can alreadv be noticed in BNDE's follow-up of projects and financial administration. Operations 32. From its inception in 1959 to June 30, 1972, BNDE approved 428 direct loans and equity operations for a total of DH 809 million (ITS$ 192 million equivalent). It furthermore approved 500 rediscountable medium term loans amounting to DII 677 million. During 1967-69, BNDE's annual approvals of direct operations hovered around DH 60 million. In 1970, they reached a record level of DE 167 million, boosted by the good investment climate pre- vailing at the t-me, and by a few large projects. In 1972, approvals were only DH 97 million. These fluctuations in BNDE's approvals reflect primarily Morocco's economic and political situation. 33. Total equity participations represent only 5.8 percent of direct operations. In the late sixties, BNDE made equity investments of only DH 2 million, partly due to its owm reluctance and to the scarcity of good opportunities. The Societe Naticnal d'Investissement (SNI) has further reduced BNDE's investment opportunities by its ourchasing, together with the Government, freshly floated shares of existing exterprises. To help broaden BNDE's role, the Government agreed during negotiations for the fifth Bank loan that BNDE would have freedom to seek out share investment opportunities, and the Bank encouraged BNDr to do so. In 1971 and 1972, BNDE made 14 equity investments for DH 26,8 million0 34. BNDE's loans to industry have terms of 5 to 12 years with a weighted average life of about 7.5 years including 1.5 vears of grace. Following the last Bank loan, interest is at 9 percent since January 1, 1972 but borrowers can in principle benefit selectively from an interest rate rebate of 2 per- centage points. To date, hiowever, no rebate has in fact been granted. The Government has advised the Bank that ther-e will be no such rebate until criteria for the eligibility of beneficiaries have been established. Loans are directed primarily towards financing the import component of a project, but a small portion of local cost is usually also covered. Overall, about 90 per- cent of BNDE's commitments are used to finaince imports. Financial Results and Portfolio 35. BNDE's accounts are audited by Price Waterhouse & Co., Casablanca, and the 1971 accounts as well as those of earlier years were certified with- out qualification. BNDE's balance sheets and income statements are summarized  - 9 - in Annex III. BNDE's profitability is satisfactory, and it has been improving due to increasing leverage and to the stability of administrative expenses at 1.2 percent of average total assets. In 1972, BNDE's net profits before provisions were 12.1 percent of net worth and 19 percent of share capital, and they are projected to rise to 15.5 percent and 33 percent respectively by 1977. 36. BNDE's liquidity position is satisfactory and its loan portfolio is sound and well protected by mortgages and suitable guarantees. On December 31, 1972, BNDE had loans totalling DH 374 million outstanding in some 180 companies. Arrears over 3 months represent 5 percent of total portfolio and, although higher than in recent years, are at a manageable level; reserves exceed by a considerable margin realistic estimates of possible losses. 37. BNDE's equity portfolio consists of investments in 34 companies totalling DE 50.4 million, out of which DH 47.2 million has been paid in. BNDE's dividend income increased about five times between 1968 and 1972, from DH 387,000 to DH 1,807,000. The latter figure still represents a return of only about 4 percent on equity portfolio. The equity participations made in 1971 (DH 17.9 million) to help increase Moroccan participation in foreign firms should increase the return on BNDE's equity portfolio in the future. 38. An agreement with the Government made in 1962, allows BNDE to retain tax free provisions. BNDE has taken full advantage of this privilege and considers the whole amount of the provisions so established as part of its net worth. Only part of these provisions are needed to cover BNDE's loss risk on its loan portfolio, and the rest could be considered as free reserves and counted as part of BNDE's net worth. A careful review of BNDE's portfolio has shown that, of the 5 percent of this portfolio affected by arrears of over three months, 3 percent represented real loss risks. The analysis of BNDE's projected financial results uses this percentage which needs to be reviewed every year. BNDE's Future Operations 39. To meet its forecast commitments through 1977, BNDE will need resources of about DH 676 million ($161 million equivalent). Over the two-year period 1973/74, BNDE's projected commitments amount to DH 279 million and projected resources to DR 163 million, leaving a resource gap of DH 116 million ($28 million equivalent). However, in order to enable the Bank to appraise the results of the organizational improvement referred to in paragraph 31, it seems prudent to have the proposed sixth Bank loan cover a shorter period than the usual two years. On the basis of the above projections, the resource gap for 18 months starting January 1, 1973, would be $21 million. Neither the $28 million nor the $21 million resource gap take into account one large project which has not yet been approved by BNDE because of difficulties in negotiations with the sponsors and which would require an additional $3 million. BNDE's management is confident that this project will be finalized during the period of the loan and in order to make allowance for this possibility, a loan of $24 million equivalent is recommended.  - 10 - 40. Over the next two years, the proposed Bank loan and other foreign exchange resources obtained by BNDE will amount to DH 199 million equivalent while the needs for import financing by BNDE are forecast at DR 237 million. BNDE will thus have to use some of its local currency resources to finance imports. This will be possible thanks to the recent improvement in Morocco's balance of payments and the ready access to foreign exchange through the central bank. Terms of the Proposed Loan 41. The terms of the proposed loan would be those normally applied to Bank loans to development finance companies, including the standard com- mitment fee. Unlike the fifth Loan Agreement with the Bank, there should be no specific limit on the use of Bank funds for public sector projects eligible for BNDE's financing under its policy statement. The proceeds of the loan should be used to finance direct imports, or the equivalent of 65 percent of off-the-shelf procurements, representing the import element of these costs. The free limit should remain $500,000, with an aggregate free limit correspond- ing to S6 million. The maximum amount of Bank funds to be used for a single investment project should be fixed at $3.5 million. The definition of BNDE's borrowing basis should be amended in order to exclude the part of provisions needed (see para.38) to cover realistically estimated loss possibilities, and BNDE should seek annually its auditor's opinion regarding the adequacy of this estimate. Under the proposed definition, BNDE's limit on term debt should be set at 6 times its borrowing basis. BNDE does not place the foreign exchange risk upon its borrowers and as in the past this would be assumed by the Government. PART V - LEGAL INSTRUMENTS AND AUTHORITY 42. The draft Loan Agreement between the Bank and the Banque Nationale pour le Developpement Economique, the draft Guarantee Agreement between the Kingdom of Morocco and the Bank, the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement and the text of a resolution approving the proposed loan are being distributed to the Executive Directors separately. The draft agreements conform to the normal pattern for development finance companies. 43. I am satisfied that the proposed loan would comply with the Arti- cles of Agreement of the Bank.  - 11 - PART VI - RECOIMENDATION 44. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments April 25, 1973   ANNEX I Page 1 of 2 COUNTRY DATA - MOROCCO AREKA 2 POPULATION DENSITY 505.940 kh. 15.8million (mid-1972) 30 per kl. Rate of Growth: 2.6 o/o(from 1960 to 1971) 186 per km2 of arable land POPULATION CHARACTERISTICS (1965 - 1970) i/ HEALTH (1965) Crude Birth Rate (per 1,000) 49.5 Population per physician 12.930 Crude Death Rate (per 1,000) 16.5 Population per hospital bed 660 Infant Mortality (per 1,000 live births) INCOME DISTRIBUTION DISTRIBUTION OF LAND OWNERSHIP (early 196-'s) 7. of national income, lowest quintile .. 70 % owned by top 10% of owners highest quintile .. .. % owned by smallest 10% of owners ACCESS TO PIPED WATER (1960) ACCESS TO ELECTRICITY (1960) % of dwellings - urban 79 7.o of dwellings -- urban 85 rural 19 - rural 31 NUTRITION (1964 - 1966) EDUCATION -- t1971) Calorie intake as % of requirements 92 Adult literacy rate % 24 Per capita protein intake (17rrmrnes) 58 Primary school enrollment 7. 54 2/ GNP PER CAPITA in 1972-2 US $240 CROSS NATIONAL PRODUCT IN 9I e/ ANNUAL RATE OF GROWTH (%. constant prices) US $ Mln. % 1960-65 1965-70 1971- 1972 GNP at Market Prices 4,382 100.0 3.0 5.1 5.8 5.5 Gross Domestic Investment 575 13.1 5.4 8.3 - 2 -1 Gross National Saving 580 13.2 1.6 4.6 20 10 Current Accoujnt Balance +5 - 3/ Exports of Goods, NFS 890 20.3 0