Morocco financial market opening on track
Rabat, July 26, 2008
Turbulence in the global banking system has not disrupted Morocco’s plan to integrate further into financial markets by opening capital accounts and adopting
a more flexible exchange rate, central bank officials said.
The north African kingdom has begun relaxing restrictions on moving money abroad that helped avoid a flight of capital in the past when banks were hit by bad debts and the economy held hostage to a farm sector that suffers from cyclical droughts.
Reforms have now strengthened the banking sector and non-performing loans have now tumbled to 6.5 percent of total loans from 19 per cent in 2004, central bank officials said.
Interest rates have dropped, non-farm economic growth is accelerating and foreign investment growing.
With the government forecasting annual economic growth of 6.3 per cent in coming years, policymakers have decided Morocco’s economy is robust enough to accelerate a move to a more flexible dirham and opening of capital accounts.
The Moroccan currency is now fixed with reference to other major world currencies, mostly the euro. Central Bank Governor Abdellatif Jouahri said in March a more flexible dirham, originally planned for 2010 at the earliest, could be pushed forward despite the uncertain outlook caused by the US subprime mortgage crisis.
’Based on objective observation, we feel there is no reason to change this position,’ the bank’s Head of Banking Supervision Abderrahim Bouazza told Reuters on Friday. Preparations are still necessary including the roll-out of risk systems in banks and ensuring exports and importers improve management of exchange risks.
But Moroccan banks are not exposed to the kind of products at the heart of the subprime crisis and are in a strong position after years of improving results, bank officials say. ’Banks today are able to master their risks far better than
a few years ago,’ said Bouazza.-Reuters