The Moorish Wanderer

Austerity Measures Ahead… But No One Cares

I’ve enjoyed a good laugh when I found this Bloomberg TV interview with Minister Salaheddine Mezouar.

I might have been saying some mean things about his politics, either as a minister or as a coalition leader, but to be actually invited to an interview with one of the biggest financial data providers and answer questions in French, s’il-vous-plaît, has been the killer: the next Head Of Government-to-be proves to be a shallow person. He was presented as a new kind of technocrat-politician, a corporate manager of sorts; he turned out to lack intellectual depth as well as wordiness.

But these are only a trifle when compared to the hidden truth about future austerity measures and budget adjustments recommended in IMF Article IV findings. To bring back deficit within the 3% GDP threshold is going to take some tough fiscal consolidation measures; not because Morocco’s economy is in a bad shape, but because the outgoing government, and the likely next government do not have what it takes in terms of political courage to venture into deep structural fiscal reforms, including the decision to put an end to a host of fiscal exonerations, breaks, preferential regimes and moratoriums.

The successive political parties in charge of treasury and finance departments always referred back to the King as the source of all executive last-resort decisions, but now the new constitution no longer provides them with this panacea of a cover; whether the King still holds these extra-constitutional powers or no longer does is only relevant to the point that partisan politicians cannot invoke it now: they have repeated, time and again, before and during the referendum campaign that the new constitution was scheduled a long time before Feb20 activists took to the streets, and that it was in His Majesty’s wish to relinquish as much power to the political personnel to manage this country and preside over its destiny.

It is understood therefore that those manifestos each party -or coalition of parties– is releasing, are what they are set on applying once they take office. I suggest citizens interested enough in the affairs of the State should rise up to the challenge and question those pledges; Starting with the Minister’s coalition.

The Alliance For Democracy commits to a lot of spending. Those programs they have priced and evaluated will load up the next couple of Budget Bills with an average of at least 50Bn additional spendings per annum. He has, in short, committed public finances to a net cumulative spending spree of 205Bn over the 6 years. Supposedly these programs are there to make Moroccans feel better, and there is nothing wrong with it. The trouble is, the same Finance Minister has received communication from IMF that he needs to bring back budget deficit to 3% GDP. The draft budget bill predicts a deficit of 22.5Bn, in line with the 3% threshold, but the bill has provisioned for 40Bn, too low a figure, considering the constant intervention to replenish the fund mid-year. And it is even more worrying that the fund starts off with 10Bn more than what was observed in the past couple of years; It means we should be expecting an actual cost of 65-70Bn for compensation, if no reforms (or cuts) are implemented in the mean-time.

But there is two things left out by the profligate M. Mezouar: where will he get the money, and how will he accommodate his spending commitments with the promise to IMF to bring down deficit to 3% GDP? He will have to cut between 20 and 30Bn in spendings to do so, and he is not telling the Moroccan public about it. But why cut spendings? Why not continue borrowing, or better still, let the deficit run beyond 3%? Somehow, that commitment to increase spending at least 50Bn on average over 6 years is in line with the Alliance’s own promised growth rate; there is a betting on a quasi-linear growth in fiscal receipts to match the expenditure increase, approximately 6%. But this recent Radio Interview with Minister Nizar Baraka shows that in the high circles, that 6% growth (let alon 7 and 8% promised by PJD and USFP manifestos) is a charade:

Le ministre istiqlalien chargé des affaires économiques et générales propose un taux de croissance annuel moyen de 5% ainsi que la création de 150 000 emplois par an. Des objectifs bien en-deçà des promesses de l’Istiqlal formulées à la veille des législatives de 2007.[…]

Radio Aswat: La CGEM souhaite un taux de croissance annuel moyen de 6,5 % de croissance, qu’en pensez-vous ?

Nizar Baraka : Cette étude n’est pas du tout réaliste. C’est un modèle économique qu’ils ont souhaité transposé au Maroc. En voulant savoir combien de taux de croissance nous faut-il réaliser pour résorber le chômage. Ce sont des mathématique et moi je suis mathématicien, mais il ne faut pas oublier le contexte international.

First off, Moroccan officials and policy-makers have prided themselves to follow IMF instructions to the letter ever since the Structural Adjustment Program of 1983. Back then, Debt to GDP ratio was 110%, the war down South was taking its toll, large economies were in recession, and the Moroccan households were reaping the rewards of a decade of budget mismanagement. Save for the nameless Sahara war, we are in the process of replicating the 1970s-1980s scenario not before long.The finance ministry and Bank Al Maghrib have been scrupulously deflating the debt, battling away inflation -to the price of a recession during the 1990s and relatively high unemployment- so as to fit orthodox financial targets. And it did: Morocco has halved its CPI inflation rate from 7% in the early 1990s, to 1% in 2010. It has done so much that at every occasion, IMF officials have always praised our officials for their commitment to stabilizing and balancing macro-economic indicators:

November 2011

Thanks to several years of sound macroeconomic policies and political reforms, Morocco was well equipped to address the 2008 international crisis and to respond to the social demands that have emerged during the Arab Spring.

March 1998

Executive Directors commended the Moroccan authorities for the progress made over the past two years in macroeconomic stabilization and in liberalizing the economy, despite the economic and social impact of the recurring droughts.

So there is little reason for the next government -who will almost certainly return with some of the incumbent government officials- to deviate from their policy; if IMF asks for a deficit contained within 3%, they will. So this means that either these pledges for infrastructure, scholarships for students, apprenticeships for labour market insertion and the like promised in Mezouar’s manifesto might not be funded and dropped altogether; or some or all of these policies will be implemented but at the cost of borrowing money on domestic and international markets. Let’s have some fun with it, shall we?

– Scenario 1: Borrow ’till the next election

We are now standing at more than 400Bn public debt stock. That’s almost 54% of GDP. It seems Moncef Belkhayat (bless him) has it in good confidence that as long as we don’t get anywhere near 60% GDP, we are doing just fine. Not so much, no. I suspect The Minister has been skipping economics classes at ISCAE business school (presumably to smoke a cigarette and sketch a business plan to make money out of it in the process)

While the government can borrow as many billions as it possibly can on domestic markets with no immediate danger on its solvency, it drains liquidity away from other economic actors. This means inflation will be pushing beyond the 2% limit observed by Bank Al Maghrib, perhaps even beyond IMF projections of 2.7%; and at the current state of things, a real increase in main interest rates will cripple the economy more than anything else. Not only will borrowing be more expensive for the government to fund its projects, but a host of households will see their mortgages go up and their consumer’s loans repayments turning more and more expensive. At this point, scenario 2 takes place, with the government slashing its spendings and putting a freeze on the compensation fund, civil service pay-wage and many other items.

– Scenario 2: Freeze and stop spending

Smarter officials and ministers will anticipate all of this and abide by BAM and IMF projections on growth, inflation and government debt. A 5% growth with a 2% inflation rate call for government spending freeze, a lull that can be used to reform the tax code, discuss the opportunity of re-introducing the Agricultural Tax and reform the Compensation Fund. But the evidence so far suggests none of this will happen, save for the spending freeze.A 10% cut means 30Bn will have to be saved somewhere, and all departmental hands are at the pump.

But then, these austerity measures do not find favours with electorate; in fact, they are likely to get irate demonstrators, unemployed, poor working class individuals to take to the streets and riot violently, as they have in 1984. This scenario recalls the context in which the late King Hassan II castigated violently the demonstrators.

(On the plus side, the austerity package will bring debt to GDP ration below 50%, it will bring budget deficit below 3%, and inflation (core inflation to be precise) will be in line with target rates).

I am expecting Istiqlal Party to release their own manifesto to make a final judgement on how the political personnel is handling the economic issues; but so far, they have been -PJD included- grossly optimistic about figures they know well will not fit their spending commitments.

Whatever it takes to get elected. Even if it means endangering public finances.

Trim That Budget – Says IMF to Morocco

Posted in Flash News, Moroccan Politics & Economics, Morocco, Read & Heard, Tiny bit of Politics by Zouhair ABH on November 5, 2011

November 3th, IMF concludes its Article IV consultations with Moroccan officials, and its recommendations ought to be taken seriously by all competing parties and coalitions when preparing their economic programs. That holds particularly true for Finance Minister and A8 Alliance coalition leader Salahedine Mezouar: there is going to be serious government budget slimming down. I have posted on the issue time and again, but it seems budget cuts do not find favours with the mainstream media.

The public communiqué states that:

Despite the slow recovery in the Euro zone—Morocco’s main trading partner—overall GDP is expected to grow between 4½–5 percent, one of the highest in the region, reflecting sustained growth in the nonagricultural sector—including the tourism sector—and a rebound in agricultural output.

So all these nice electoral promises about a 6-7 or even 8% GDP growth fly right out of the window. Unless USFP, PJD and A8 are granted a “manna from heaven” like in those tutorials I have to solve as a grad student. But I deal with abstract, theoretical model, they, the likely members of the next government coalition, cannot afford to be cavalier with GDP projections.

GDP growth Histogram vs generated Normal Distribution proxy (with R)

Plus these projections are in line with the potential GDP, the half-a-century average (that shapes very nicely in terms and so the best thing the domestic economy can hope for during the next 5 years is to hold steady at those levels; Because the prospect isn’t all bright and sunny for the economy.

Executive Directors commended the authorities for their sound macroeconomic policies and structural and political reforms that have helped Morocco weather the global crisis and respond to pressing social needs. Looking ahead, Directors noted that significant challenges remain, including the uncertain economic outlook in Europe and the region, the need for fiscal consolidation in the face of large popular demands, and the urgency to implement an ambitious agenda to boost employment and inclusive growth.

The sound macroeconomic policies, up to a point, have proven to deliver tangible results. Unfortunately, these kudos are not the Finance Ministry’s fiscal policy, and might be restricted to a 4-years trend in bringing down the public debt. On the other hand, the Central Bank has done a pretty good job in containing inflation below 2%, and at the same time provide adequate regulations and scrutiny on the financial sector.

What would, on the other hand, contradict Minister Mezouar’s record is the IMF’s insistence on inclusive growth. That means growth alone isn’t enough to alleviate inequalities and income gap; something that our officials have yet to grasp -and tend to ignore in a triumphalist communiqué published the same day. M. Mezouar can go all the way up to 7%, it will not solve this country’s economic and social problems if the growth gains aren’t distributed so as to benefit the many and not the happy, wealthy few. He ought to reconsider his supply-side fiscal policy for instance…

But the spooky thing is yet to come: starting from 2012, government departments will have to undergo a budget adjustment process. That’s euphemism for budget cuts:

Maintaining prices for certain food products and fuel unchanged in the context of rising international commodity prices, will require spending on food and fuel subsidies of about 5½ percent of GDP in 2011, considerably in excess of the 2.1 percent of GDP estimated in the 2011 budget. In addition, all civil service wages were increased by a nominal amount of about US$75, which is expected to increase the wage bill by 0.2 percent of GDP to 10.7 percent of GDP. At the same time, the authorities took significant offsetting measures, which will help containing the budget deficit at around 5.7 percent of GDP. The authorities are preparing to implement fiscal consolidation measures starting in 2012 to bring the deficit down to 3 percent of GDP in the medium term, which would bring the total public debt to about 50 percent of GDP in the medium term.

Cutting the deficit from 5.7% to 3% GDP is a simple question of arithmetics, a problem facilitated by the refusal on behalf of almost all parties to commit to any tax increase, or at least to put an end to an array of moratoriums on various items like the Agritax (theoretically due to expire on December 2013) in financial terms, budget adjustment means 20Bn will have to be saved somewhere, and this figure is dangerously close to the 10% budget cut agreed upon three months earlier:

“8. After containing fiscal expansion in 2011, the authorities are preparing to implement fiscal consolidation measures starting in 2012. The authorities intend to pursue a fiscal consolidation plan to bring the deficit down to 3 percent of GDP in the medium term, which would be in line with a debt to GDP ratio converging to about 50 percent of GDP. In addition, Article 77 of the new constitution and the draft organic budget law for 2012 outline the principle of safeguarding fiscal stability. In the absence of corrective measures, the budget deficit could reach 6½-7½ percent of GDP and consequently public debt will continue to rise. […]

IMF Headquarters, Washington, DC.

IMF Headquarters -Image via Wikipedia

Given the importance of demonstrating the government’s determination to maintain fiscal sustainability, the mission believes that there is little room for further measures to increase government expenditure. Revenue efforts were intensified and higher than budgeted revenue were collected at end June 2011 –mainly from indirect taxes. These efforts should continue in the second half of the year and should enhance revenue collection by 1 percent of GDP compared to the 2011 budget. Consequently, total revenues are expected to remain almost unchanged compared to 2010, at around 25 percent of GDP. On the expenditure side, all budget entities have been requested to economize 10 percent of their budget allocations for some nonessential current expenditure items.”

fiscal consolidation means slowing down government expenditure and paying back the debt at a higher rate. So when A8 Alliance proposes the biggest government budget increase since 1976, they are at best disingenuous, and mainstream media does not seem to report on these discrepancies, especially when one knows that A8 leader Salaheddine Mezouar is the outgoing Finance Minister.Bringing down public deficit to 5.7% GDP means those 20-30Bn will have to be cut somewhere: Education budget, High-Speed train, Military purchases?

Though our financial solvency is not at stake, the apparent cavalier attitude to national debt displayed by the minister in his draft 2012 Bill and his dismissal for the need for structural fiscal reforms make one wonder: can he be trusted to lead the next government?

Morocco’s Political Leaders and Some Fiction Characters

Posted in Ancient Times, Happy Times, Intikhabates-Elections, Morocco, Tiny bit of Politics by Zouhair ABH on November 3, 2011

Let us enjoy some jokes at the expenses of our politicians. It lightens the mood and reminds everyone of  us that though we take issues seriously, it would be best never to forget not to take ourselves too seriously.

ALIBUY- Driss Lachgar

A villain in Bee Movie, Al. Layton (ALIBUY) is the attorney representing “The Honey Trust”. A colourful character with considerable girth, Al doesn’t shrink from using bare-knuckles tactics to discredit the bees during the court hearings. In Moroccan politics, Al would do just fine: the long way to the top requires to do whatever it takes to reach it; Not that anyone would suggest M. Lachgar would do such a thing, or that he is a practitioner of the dark political arts.

Incidentally, Driss Lachgar is also a lawyer.

Calimero - Mohamed Cheikh Biadiallah

PAM leader and Calimero do not share much in terms of charisma, but they are both quick at complaining repetitively: “This is not fair!”. A catchphrase the nominal head of the Tractor Party frequently uses the deflect criticism about the real motives behind the existence of PAM. Oh, and both have a rather large forehead; egg-shaped and all.

Mahmoud Archane - Bob Ritchie

Governor Robert ‘Bob’ Ritchie (James Brolin) is a character from the West Wing, and President Bartlet‘s Republican opponent during his second election campaign. Any West Wing fan would tell you there is a troubling resemblance between both characters, physically and perhaps in personalities too: a declared hatred of liberals -either as soft on crime or outright prone to treason- a rejection of intellectualism as elitism and alien to folksy culture, etc. former Police Chief Mahmoud Archane -who has gone out of the Moroccan political radar for a while- is still MDS (Mouvement Démocratique et Social) figurehead.

"OBenkirane Kenobi" (Abdelilah Benkirane - Obi Wan Kenobi)

Obi Wan Kenobi from Star Wars -as portrayed by the legendary Sir Alec Guiness– bears some resemblance to PJD leader Abdelilah Benkirane; and not just physical features. Both have dedicated their lives to fight the Dark Side of the Force – although it is not always clear who is Benkirane’s Sith Lord. But apart from that, they do not share much in terms of character: Benkirane can be petulant, aggressive and bullying at times. Obi Wan Kenobi would simply say, in Guiness’ lofty voice: “These aren’t the Islamists you’re looking for

Abdelouahed Radi - The Cat

Somehow, I have always believed Abdelouhed Radi -USFP Premier- to be some well-fed cat (who got the cream) in another life. His mysterious smile, his jovial figure and that je-ne-sais-quoi air of gentleman farmer (which he is) that really do not embody the imagine of fire-and-brimstone socialist one might think of when referring to USFP. Just like the Cat in Lewis Carol’s novel, Abdelouahed Radi swoops in unexpectedly, with a broad smile he always leaves behind when he disappears. But beware! Just like the cat, he is always around (in fact, ever since the 1963 elections)

Abdelkrim Benâtik - Patrick Bateman

Both are handsome and have been working in the banking sector. But one (Christ Bale in American Psycho) is an inner psychopath the other… Well, one may never know. For a long time, Abdelkrim Benâtik -PT leader- has been the handsome playboy of Moroccan politics and a bit of a maverick when he was still USFP junior minister.

Salaheddine Mezouar - Ulysses Everett McGill

Our very own George Clooney looks a lot like Ulysses Everett McGill from O’Brother movie. Handsome indeed, but a bit crooked; McGill, who boasts about his superior intellectual over his two companions, turns out to be a fraud. Our Finance Minister and (next?) Head Of Government is so much better than that, and he still retains George Clooney’s masculine charm.

Hamid Chabat - Tucco "The Ugly"

Hamid Chabat is no Tucco (Ellie Walash in “The Good The Bad and the Ugly“). Save perhaps for the moustache, he has risen through the ranks of UGTM union; while some might find similarities with a Highwayman’s curriculum, Fez mayor has acquired respectability. Tucco has not. But both seem to be lured by the prize: one is looking for power in one of the largest parties in Morocco, the other $ 200,000 in Confederate Gold.

Fiscal Policy? What Fiscal Policy?

Posted in Dismal Economics, Moroccan Politics & Economics, Morocco, Tiny bit of Politics by Zouhair ABH on July 3, 2011

Sometimes, reading the budget from top to bottom does not tell much about the policy the government of the day is set on pursuing. So other documents come in handy, like the fiscal expenses report attached to the budget law; It shows how articulate government policy is in its effort to stir the economic variables deemed to be important in a certain direction, so as to achieve a certain policy objective. It might be interesting to have a look to these figures, because it is a cause of concern for me: it seems the Finance Ministry cannot make up their mind on the proper policies, especially on fiscal policies, and end up every year squeezing its receipts, and not in a good way.

Caring Government.

Assuming that the broad ideological objective is to relieve Moroccan taxpayers (households and businesses alike) from the burden of excessive taxation, and that such policy is bound to increase welfare among the communities and the economy as whole, the least Finance Minister Salahedine Mezouar and his staff can do is to make sure there would be some sort of equitable effect across classes and sources of revenues. Though the supply-side economics can be beneficial -up to a point- these policies have unfortunately been damaging, rather than healing income dispersion and discrepancies. It seems budget policy -at least since 2003- is to hope for high growth figures, so as to reduce income inequality. The 2007 tax cuts are an even more obvious faith in an economic growth robust and long enough so as to reduce poverty and income dispersion, indeed, HCP study “La croissance est-elle pro-pauvres au Maroc ?” (2009) reports:

“Il en résulte un indice de croissance pro-pauvres inférieur à l’unité (0,930) et un taux de croissance d’équivalent pauvreté de 44,7% inférieur, de son côté, au taux de croissance observé (48,0%). Rappelons que lorsque l’indice de croissance pro-pauvres est compris entre 0 et 1, les riches bénéficient plus que proportionnellement de la croissance que les pauvres. C’est exactement ce qui s’est passé entre 1985 et 2007″. (p.2)

Suffice to say that what holds for extreme levels of poverty is particularly true when it comes to the difficulty, for the real middle class in Morocco (and the lower, working classes too) to benefit this growth. That supply-side economics of his makes the 2002 and 2007 governments more pro-Business than ever, but with no obvious positive effects on the vast majority of ordinary Moroccans.

The 2011 Budget bill has passed a deficit of MAD 12.13 Bn, a rather modest figure when compared to earlier deficits (but already topped by the unexpected increases in expenses, mainly on subsidies and wages) though it hides some policy decisions that do not seem to be very sound, or if they were, are quite ideological and socially very divisive. Among others, there were MAD 4.2 Bn income tax cuts in 2010 (and an effective MAD 7.6 Bn) only half of which benefited to middle and lower-class households; These cuts are not economically beneficial to the majority, especially when those economic sectors that benefit from these tax cuts (whether on income tax or others) are not productive: over the last couple of years, certain fiscal measures have been taken to boost real estate in Morocco. In 2010, real estate tax deduction amounted to MAD 4.438 Bn that is 15% of all the MAD 29.8 Bn tax cuts plan in 2010 (scheduled for the 2011 Budget) The 39 measures that enabled these cuts benefited only up to MAD 1.3 Bn in social housing (while other cuts benefit to the well-off) while the rest goes in the pockets of property and real estate developers, large housing owners and corporations. The problem does not reside in these categories benefiting from these tax cuts, the real problem is the hypocrisy surrounding the social housing project. This is but one instance of the amateurish at best -if not outright carelessness on the government’s behalf- in assessing the effects of implemented policies.

Jobs for the boys. An annual MAD 10Bn goes into rich pockets

On average from 2003 to 2011, tax cuts and loopholes amounted to MAD 21.75 Bn; Real Estate and Agriculture get an average share of 30% of these measures, while education gets at most MAD 100 Million while the financial sector receives on average a Billion a year. The trend of this concentrated distribution increases markedly with 2007.

As for Agriculture, it is understood the sector employs a large workforce -thus requiring a particular social policy designed to insure the balances in this potentially volatile part of Morocco are left untouched (a left-wing government would try to improve them in favour of the peasants against the cambradores) governments since 2006 have been cutting taxes on agriculture at increasingly higher paces, from a MAD 1Bn exemption in 2003 to MAD 4 Bn.

But then again, doesn’t this square with the idea that government taxation should not fall on this fragile sector? Of course it does, unless these measures were actually helping the affluent farmers, those who can afford dozens of thousands acres of land, mechanized techniques and large markets, both abroad and domestically. As for the small peasant with a few dozens of acres, these tax breaks mean nothing. On the other hand, tax breaks can also be applied, so as to improve the domestic purchasing power (at least, that’s the official argument behind these cuts) it seems that the Finance Ministry has fully assimilated the supply-side economics, since their tax policy also believes in a trickle-down economy, whereby a decrease in costs (and in this particular case, VAT taxes) can generate a lower price for consumers. While this argument might hold -when buttressed with some serious econometric computations, we in Morocco do not observe this, and the starkest example is that of subsidies: indeed, edible oil, sugar, milk and other strategic commodities are subsidised, and yet manufacturing companies are recording high levels of profit, and prices are not always low.

Consider the 32 measures targeting Agriculture and Fishery sectors:

Exonération à l’intérieur et à l’importation d’engins et filets de pêche destinés aux professionnels de la pêche maritime. Art.92 (I-3°);123

Exonération à l’intérieur et à l’importation des engrais. Art.92 (I-4°);123

Exonération à l’intérieur et à l’importation de matériels destinés à usage exclusivement agricole. Art.92(I- 5°);123

Exonération des ventes aux compagnies de navigation, aux pêcheurs professionnels et aux armateurs de la pêche de produits destinés à être incorporés dans les bâtiments de mer. Art.92(I-34°)

Application du taux réduit de 7% avec droit à déduction sur les aliments destinés à l’alimentation du bétail et des animaux de basse-cour. Art.99(1°); 121

Exonération à l’importation des bateaux de tout tonnage servant à la pêche maritime, les engins et filets de pêche, les rogues de morues et appâts destinés aux bateaux pêcheurs ainsi que les appareils aéronautiques destinés aux armateurs et aux professionnels de la pêche en haute mer et utilisés exclusivement pour le repérage des bancs de poissons. Art.123(9°)

Exonération à l’importation des Animaux vivants de race pure des espèces équidés, bovine et ovine ainsi que les caprins, les camélidés, les autruches et les oeufs à couver des autruches. Art.123(12°)

And the list goes on. It seems these tax breaks are very much subsidizing imports of specific items the vast majority of farmers and fishermen cannot afford. Of course, there are some commendable measures to be recorded, like those:

Exonération de la vente des dattes conditionnées produites au Maroc ainsi que les raisins secs et les figues sèches. Art.91(I-A-4°)

Exonération de l’huile d’olive et des sousproduits de la trituration des olives fabriqués par des unités artisanales. Art.91(I-A-7°)

Application du taux de 14% sur le beurre à l’exclusion du beurre de fabrication artisanale. Art.99(3-a°);121

But that’s about it. And these amount to very little in terms of fiscal expenses, compared to the potential gains when imports taxes are applied to the item delineated above. The same can be said of the fiat exemption until 2014 of the whole Agricultural output from any taxation; such a measure, while seemingly populist and caring, benefits mainly to the wealthy farmers, and adds up to the double-exemption this population benefits from: tax exemption when importing these items the Budget bill considers vital for farming, tax exemption on exports -their main market- and finally, tax exemption on income they derive from these businesses.

Bumpy road ahead: Morocco's CDS is taking up a few dozen bps

The list of strange and unjust exemption is long; suffice to say that this unsound fiscal policy, added to the debt the Moroccan government is taking on to defuse social discontentment, do not allow for optimistic outlook. On financial markets, the Kingdom’s CDS Debt -a good measurement has climbed some 50 basis points up since the beginning of 2011, and is now at the same level it was during the 2009, while it almost doubled over one year. It is also worth mentioning that the fundamentals of Moroccan debt are not the ones to worry about, nor the current level of CDS (compared to other countries like Greece or Ireland) but rather the discrepancies between terms: while all maturities move across time in the same direction, the shorter maturities seem to be more sensitive than the longer ones. It does vindicate the idea that somehow, fiscal and debt policies do not seem to be motivated by any kind of long-term strategy, but the one to prevail, even at the price of abysmal budgeting and subsequent austerity plans.

Best of luck to the next Finance Minister. Oualalou’s and Mezouar’s respective legacies are a tribute to a pro-wealthy policies… and to the present potential mess lurking in the shadows and ready to burst off. Great show Ministers, you have done very well.