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The Mohamed V Sqaure in Casablanca. Image: milosk50/Bigstock

World Bank offers $350m support to Morocco reforms

WASHINGTON, May 18, 2017

The World Bank has announced a $350 million programme to support wide-ranging reforms of financial intermediation in Morocco.

The operation supports new sources of financing for small and medium enterprises (SMEs) while improving the regulatory oversight of the banking sector.

The operation also supports capital market development by broadening the range of instruments and strengthening the protection of Moroccan investors. Finally, it addresses the financial sustainability of the civil service pension fund, thereby preserving its role as a major institutional investor. The programme will eventually unleash new financing solutions for small enterprises and the real economy more broadly, said a statement.

To improve access to finance and promote financial inclusion, the Second Capital Market Development and Small and Medium Enterprise Finance Development Policy Loan (DPL) supports the expansion of the state’s loan guarantee schemes into Morocco’s regions.

It also supports the development of credit information on new borrowers to facilitate lending decisions, as well as the provision of alternative payment services outside the traditional banking system. This will over time improve the financial lives of households and small enterprises with hitherto limited or no access to the formal financial system.

With the financial sector exposed to new risks as the economy develops and Moroccan companies diversify into Africa, the DPL also supports enhanced central bank supervision of banks particularly those belonging to large financial conglomerates that could pose a risk to the entire financial system.

Stabilising the finances of the Caisse Marocaine des Retraites, the mandatory pension fund for civil and military services, is a key part of the programme. The reform gradually increases both the retirement age and contributions, as the first stage of a comprehensive reform toward restoring financial soundness to the pension system.  

The reform raises immediately the minimum pension payments for those at the lower end of the salary scale to protect the least well-off retirees and women survivors. Taken together, the reform safeguards the pension promises made by the State to its civil servants, it said.  

“Morocco has made significant progress over the past two decades in modernizing its financial system and creating an environment conducive to private sector development,”” said Marie Francoise Marie-Nelly, World Bank Maghreb country director for the Maghreb and Malta.

“Global experience shows that private initiative is the engine of job creation, and better access to finance for SMEs, along with other financial inclusion efforts while safeguarding financial stability, will help unlock the immense potential of Morocco’s youth and women.” - TradeArabia News Service
 




Tags: World Bank | Morocco | reforms |

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