Announcement of World Bank Supports Morocco’s Economic Adjustment Program with Two Hundred Million Dollars Loan on December 5, 1988

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 BANK NEWS RELEASE NO.89/14 Contact: Fawzi Rihane (202) 473-2675 WORLD BANK SUPPORTS MOROCCO'S ECONOMIC ADJUSTMENT PROGRAM WITH $200 MILLION LOAN WASHINGTON, December 5, 1988 -- Morocco will use a $200 million loan from the World Bank to carry out the first phase of an economic structural adjustment program designed to achieve sustained economic growth that would ensure job opportunities and higher living standards for the country's growing population. The loan will build on economic stabilization programs supported by the International Monetary Fund and sectoral reforms assisted by the World Bank. The governmment's adjustment program will increase productive investments, ensure macroeconomic balance, improve overall economic efficiency and restore the country's creditworthiness with a view to regaining access to international financial markets. The loan is expected to be disbursed in two stages over the next year, as the government implements reforms. The adjustment program will contribute to economic growth and diversify exports by supporting trade liberalization measures, including reduced import restrictions and intensified export promotion. The loan also supports measures to overhaul the taxation system and improve tax collection. Public-investment in infrastructure and human-resource development will increase and become more efficient, and budgetary procedures will be improved. Measures will be taken to improve the country's debt management system, which would include rescheduling arrangements, informing policymakers of the relative merits of monitoring different restructuring options, and facilitating the formulation of an external debt policy. Since 1984, the World Bank has supported Morocco's adjustment program through several loans. Two industrial and trade policy loans, totaling $350.4 million, helped reduce trade barriers in a variety of industries and encourage production of goods for export. In agriculture, two adjustment loans amounting to $325 million have fostered efficient growth through liberalized pricing and marketing. The education sector has benefited from a loan of $150 million which helped reduce the budgetary burden of education at all levels, while making education more accessible to everyone. -2- More recently, the Bank approved a loan of $240 million for a program of restructuring of public enterprises with the aim of promoting their financial and administrative autonomy. Total World Bank lending to Morocco has amounted to more than $4 billion in support of long-term investments in infrastructure, social development and economic reform programs. The new World Bank loan is for 20 years, including five years of grace, with a variable interest rate, currently 7.59 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on the undisbursed balance. Note: Money figures are expressed in U.S. dollar equivalents.