Announcement of World Bank Supports Morocco's Financial Sector Reforms on June 27, 1991

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.91/106 Contact: Fawzi Rihane (202) 473 2675 WORLD BANK SUPPORTS MOROCCO'S FINANCIAL SECTOR REFORMS WASHINGTON, June 27, 1991 -- The World Bank is supporting Morocco's financial sector reforms and is providing the country's banking system with long-term capital to finance private investments through a package of nine loans totaling $235 million. A first loan of $125 million will support the government's program of financial sector reforms designed to increase competition in the banking and financial systems. The program will support policy actions--including transition towards indirect monetary control; the development of financial markets, in particular for government securities; the freeing of interest rates; the elimination of directed credit policies; and the strengthening of bank supervision and prudential regulations--to improve the efficiency mobilization, and allocation of investment funds and to develop more flexible methods for implementing monetary policies. The financial sector adjustment loan is expected to be disbursed in two instalments, the first ($75 million) as soon as the loan becomes effective, and the second ($50 million) after a review of progress in implementing the program. Lines of credit, totaling $110 million, will be provided to the Banque Nationale pour le Developpement Economique (BNDE) and eight Moroccan commercial banks to support medium- and long-term financing for the expansion and modernization of the private, mostly industrial, export-oriented sector. Parallel to the lines of credit, the International Finance Corporation (IFC) will lead a syndication for the equivalent of $100 million to provide additional financing to four of the eight participating banks. The banking system in Morocco includes Bank Al-Maghrib (the Central Bank), 15 commercial banks, and five specialized credit institutions. Other financial institutions include the Treasury, the postal checking system, the National Savings Bank, and the Caisse Centrale de Garantie. There are also six leasing companies, mostly owned by the banks, and a number of insurance companies. Capital markets are still in their infancy, and the Casablanca stock exchange has, so far, played a limited role in mobilizing equity finance. The World Bank loans are for 20 years, including five years of grace, with a variable interest rate, currently at 7.73 percent, linked to the cost of the Bank's borrowings. They also carry an annual commitment charge of 0.25 percent on undisbursed balances. NOTE: Money figures are expressed in U.S. dollars equivalents.