Assessments released back in January revealed that Morocco's economy had expanded by merely 0.2 percent in 1999, compared to 6.5 percent in 1998. In response to this news, the government unleashed a package of initiatives aimed at stimulating the economy (mainly through attracting foreign investment) and curtailing poverty and unemployment.
The most recent initiative, announced back in April, consists of allocating $700 million from a special fund to boost economic activity and create jobs. This fund was established last year after the Kingdom awarded the second GSM telephone license to the Spanish Telefonica-led consortium for $1.1 billion. The $700 million will be devoted to infrastructure projects such as roads and housing. Stakes will also be devoted to the agriculture sector, mainly the expansion of irrigated lands.
Earlier, the Industry and Trade Ministry announced a plan to create a $10-million capital development fund, which will assist industrial enterprises to become listed on the stock market. These funds will aid firms in restructuring and modernizing their production facilities prior to going public, which should enhance the industrial efficiency of medium-sized companies.
A further endeavor aims at alluring foreign oil exploration activities. New hydrocarbon legislation eliminates taxes on energy firms and offers a 10-year tax break to offshore oil production companies. More exploratory operations are anticipated following the promulgation of these new laws.
Still, rising inflows of foreign investment do not automatically translate into economic growth. In 1999, foreign direct investments in this North African State reached $1.9 billion, compared with an average of $450 million over the past five years. Nevertheless, the economy exhibited scant growth, mainly due to the prolonged drought that stunted agricultural output. The government hopes to sustain high levels of investment this year, and has recently approved 10 new ventures, valued at over $900 million, which will be realized in 2000 and 2001.
© 2000 Mena Report (www.menareport.com)