18-Month:  Mohamed 75%
 Five-Year:  Mohamed 70%


 Turmoil Financial
 18-Month:  Moderate  B-  B  B-
 Five-Year:  Moderate  B-  B  B

( ) Indicates change in rating.
* Indicates forecast of a new regime.

Years Real GDP
Growth %
Inflation % Current
Account ($bn)
 2010-2014(AVG)  3.7  1.2 -7.22
 2015(F)  4.1  1.3  -6.10
 2016-2020(F)  4.6  1.9  -7.60


Signs of Unease

Key Points To Watch…

  • Morocco has been among the most stable countries in North Africa and the Middle East since the region was rocked by the Arab Spring uprisings in 2010, benefiting from the strong political foundation provided by its status as a constitutional monarchy, and the generally competent performance of the governing PJD, which rode to power on a wave of anti-establishment sentiment that also resulted in victories for Islamist parties across the region. Relations between Prime Minister Abdelilah Benkirane and King Mohamed have not always been smooth, but it appears that for the most part they are both inclined to avoid unnecessary conflict…
  • However, voters are disillusioned with the persistence of corruption and the lack of political reforms since changes were made to the constitution in 2011, and with local elections scheduled this year, and international criticism of Morocco’s human rights record growing louder, political leaders are facing pressure to act…
  • New electoral laws have yet to be debated in the Parliament, owing to the refusal of opposition parties to participate in an electoral commission responsible for drafting the new rules, on the grounds that it is dominated by government representatives. Benkirane has delayed local elections by three months, to September 2015, and if he attempts to push ahead without the blessing of all parties, he risks validating opposition claims the he has authoritarian designs, a charge that could undermine the PJD’s electoral support…

Uneven Policy Implementation Will Impede Development

  • The incumbent administration’s economic reforms, which have included cutbacks in spending on subsidies under pressure from the IMF, have only added to the sense of disappointment and discontent among the electorate, and the PJD is expected to suffer losses at the general election that falls due in 2016. Consequently, the most likely five-year scenario is a return to the pre-Arab Spring norm, namely, the installation of a multi-party coalition of pro-monarchy parties that is largely content to take its cues from royal establishment…
  • Whether in opposition or as a member of the governing coalition, the PAM, which effectively functions as the king’s party in the Parliament, will continue to play its assigned role of creating a bulwark against any policy moves that threaten either the prerogatives of the monarchy or the economic interests of the king’s allies in the business community…
  • Although the government has made little progress with regard to political reforms, efforts to create a stronger fiscal foundation and enhance Morocco’s attractiveness to foreign investors have made some headway. Benkirane’s administration has already begun to tackle the politically sensitive task of slashing state spending on subsidies, a crucial component of its strategy for reining in the budget deficit, and the government has pledged to spur job creation with policies designed to boost inflows of FDI, including tax cuts and the elimination of bureaucratic obstacles…
  • Financial reforms currently being considered by the Parliament were formulated with input from the IMF, and are designed to improve export competitiveness, expand private access to credit, and protect against political interference in the implementation of monetary policy…
  • Although any elected government will be inclined to relax legal restrictions on foreign investment and provide incentives to attract higher levels of FDI, informal barriers, including corruption and weaknesses with regard to competition, will continue to hamper the operation of businesses…
  • Over the medium term, state efforts to diversify the economy will attract additional foreign investment, while closer commercial ties with the EU, the US, and countries in Latin America will provide a boost to exports. However, the potential for disruptive domestic political tensions creates a risk that fiscal resources could be diverted into populist spending programs, negatively affecting the availability of state financing for projects aimed at promoting economic diversification. On balance, real GDP growth is forecast to average 4.6% per year through 2020, below the minimum 5.5% level required to make a significant dent in unemployment and poverty.


Economic Forecasts for the Three Alternative Regimes

 Mohamed  Military  Fundamentalists
 Growth(%) Inflation (%)  CACC ($bn) Growth(%) Inflation(%) CACC ($bn) Growth(%) Inflation(%) CACC ($bn)
 2015  4.1  1.3  -6.10  2.3  2.4  -8.10  0.8  4.8  -10.90
 2016-2020  4.6  1.9  -7.60  2.2  5.3 -10.20  1.0  10.3  -11.40

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