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Morocco confident amid financial crisis

Morocco confident amid financial crisis

Morocco wants to capitalize on the international financial meltdown by luring European companies and tourists to its cheaper shores, the country's central bank chief said Thursday.
Abdellatif Jouahri is confident his North African country, with its service-based economy, will weather the fallout from the financial crisis better than its neighbors more dependent on oil and gas exports, such as Algeria and Libya.
Morocco's exposure to foreign capital is "so limited as to have little direct impact on our economy," Jouahri told The Associated Press in a telephone interview.
He said Moroccan banks had very small capital exchanges with the major Wall Street and European institutions at the center of the financial meltdown, and that only 2 percent of Morocco's stock exchange was in foreign hands. While many Moroccans still live in poverty, the country's economy has grown steadily in recent years and banks in particular have expanded, especially in sub-Saharan Africa.
"But if the impact on finances is limited, the potential effects on the real economy are serious," Jouahri said, because Morocco heavily depends on tourism with Europe.
He is hoping a global recession will work to the country's advantage because of its cheap prices.
"We are working on inventive ways to market our country's services," he said. Predicting that European banks would need to cut costs, he said Morocco could offer "competitive offshore services" to outsource back-office operations such as accounting. Several large European companies already outsource some of their office work to North Africa, such as the French railway firm SNCF, in Morocco.
With its Atlantic coastline and Atlas Mountains, Morocco is a major world tourism destination, with 7 million vacationers this year _ and wants to stay that way even if recession hits the rich countries that provide its visitors.
"The government is working on packages that would make it cheaper for tourists to come to Morocco than to remain in their expensive European cities," Jouahri said.
He stressed that Morocco's economic indicators were healthy and that national regulations already had strict requirements on banks' solvency ratios _ or their ability to meet debt obligations _ before the current meltdown.
An International Monetary Fund report issued this week said Moroccan banks were "stable" and "resilient to shocks" and praised economic reforms made since 2002.
Jouahri, who just returned from the IMF's yearly bank governors' meeting in Washington, argued the impact of recession could be more worrying for North African countries that heavily rely on oil revenues to fund their government spending.
"Libya and Algeria could have difficulties with their investment programs if oil prices go down," Jouahri said, adding that Morocco doesn't face the same risk because it exports few commodities.
Algeria currently has US$133 billion in cash reserves thanks to high prices fetched by oil and natural gas this year. But hydrocarbons represent more than 95 percent of the country's exports and there are worries an economic slowdown in Europe would lessen demand, thus lowering prices. This could prevent the government from funding the large construction schemes it launched to stimulate an otherwise lagging economy.
Libya is in a similar position but has planned less public expenditure, while Tunisia's revenues are service- and tourism-oriented, like Morocco's.
Algerian finance officials have played down the worries, saying they had already anticipated lower oil prices in their national budget and wouldn't be affected if the barrel remains at a reasonable price.
Several African nations have also publicly worried that the financial meltdown would diminish international aid to their countries.
The head of the World Bank, Robert Zoellick, voiced similar concerns earlier this week, and the bank said in a statement it was considering a new fund that would inject capital into financial institutions of developing countries to avoid a credit crunch. The initiative would be similar to one adopted by countries that use the euro currency, the World Bank said.


Updated : 2021-10-20 22:34 GMT+08:00