According to Article 50 of the constitution, the national parliament votes on budget appropriations. If the budget is not approved by the close of the fiscal year, the government is authorized to issue budget expenditures by decree. Law 7-98 of November 26, 1998, the organic law defining budget laws, provides a clear legal framework that is effectively implemented. Reforms were underway in 2005 to clarify distinctions between commercial and non-market public agencies, to bring the Hassan II Development Fund and other off budget agencies into a general budget consolidating central and local government expenditures, and to develop a medium-term fiscal framework. Although taxes and duties, comprising 25.1 percent of GDP in 2004, were among the highest in the Middle East and North Africa (exceeded only by Tunisia), efforts were underway to reform the fiscal system so as to broaden the tax base.
Authorized through article 97 of the national constitution, audit courts in Morocco provide assistance to the national parliament and are responsible for assessing regional and local as well as national accounts. The Audit Bureau of the Ministry of Finance, alongside the supreme Audit Court (Cour des Comptes), governs a wide spectrum of financial management in Morocco. The Audit Court (al-Majlis al-A'laa lil-Hisaabaat), first created by Law N° 12 of 1979, was raised by the revised Constitution of 1996 to the status of a constitutional body. The audit courts apply the Financial Courts Code promulgated by Law No. 62 of 13 July 2002. The reports of the Audit Court, however, are not publicly accessible and are rarely followed up by the judiciary. Another auditing body, the Inspection Générale des Finances (IGF) is supposed to audit government and other public entities and to monitor foreign loans and credits, but it also lacks autonomy, depending on the Ministry of Finance and Privatization, and the judiciary usually fails to follow up on its reports.
In July 1999, a decree was passed that improved the bidding and audit procedures for public contracts. Moreover, reports must now describe selection criteria for such procurement. Moroccan legislators, while admitting there is much room for similar efforts, have stated that these efforts are a step in the right direction. The General Confederation of Moroccan Enterprises (CGEM) encouraged new legislation in 2005 for public tenders, but it did not include regulations for procurement by the armed forces. The law on public concessions (“service public délégué”) adopted in 2006 is a positive step toward regulating procurement in public services such as water or electricity distribution. A decree issued on 5 February 2007, ostensibly designed to give greater flexibility in the use of electronic information for public tenders, may also make these markets more transparent.
The Bank Al Maghrib, Morocco's central bank, is relatively autonomous and steers an orthodox monetary policy. The Bank Al Maghrib supervises an active, predominantly privately owned commercial banking system. It lifted credit restrictions in 1991. The Banque du Crédit Populaire, the largest of the banks, is in process of privatization. The Banque Commerciale Marocaine is the leading privately owned bank, overseen by a government-sponsored affiliate. Its principal competitor is the Banque Marocaine du Commerce Extérieure, which was successfully privatized in 1995. Both of them, like the four other leading commercial banks "Moroccanized" in the mid-1970s, still enjoy close links with leading French banks.
A new banking law under discussion in 2005 is designed to strengthen the supervisory authority of the Bank Al Maghrib over the commercial banking system, including specialized state banks. A comprehensive counterterrorism bill passed in June 2003 already provides the legal basis for lifting bank secrecy against suspected terrorists, and the central bank also issued Memorandum No. 36 in December 2003, in advance of passage of anti-money laundering legislation, instructing banks and other financial institutions to conduct their own internal analysis/investigations. The pending legislation will set up a Financial Intelligence Unit to track suspicious financial movements. Morocco was a founding member in 2004 of the Middle East and North Africa Financial Action Task Force (MENAFATF), a part of the global network to combat money laundering and terrorist financing.
Nonperforming loans, primarily held by specialized state banks, comprised 19.4 per cent of total outstanding loans in December 2004. The troubled Credit Immobilier Hôtelier was seeking an international partner, and the Credit Agricole du Maroc will be obliged to meet international prudential standards by June 2007.
Privatization of state-owned enterprises is expected to continue at a gradual pace, but most of the funds from the sale of state firms will be used to cover government expenditure and debt repayments, leaving little for productive investment. The International Monetary Fund reports that both residents and non-residents may hold foreign exchange accounts, subject to restrictions and requirements. Personal payments, transfer of interest, and travel payments are subject to limits, documentation requirements, and approval in some cases. Real estate transactions are subject to the investment regime, and foreigners are not allowed to own agricultural land. A recent edict by the king established 16 regional investment centers, headed by an appointed wali (governor), to circumvent bureaucratic opposition and stimulate new investment by consolidating the investment process, coordinating land purchases, offering incentives, and providing land with clear title. In the first quarter of 2001 the privatization of 35 percent of Maroc Telecom for $2.1 billion (6% of the Morocco's GDP) injected new momentum to Morocco's privatization process, which had netted the government a cumulative total of $3.1 billion by the end of 1999.
The Casablanca Stock Exchange is a private entity independent from the prevailing financial structures in that it has a significant number of brokerage houses and investment banks that are free of the predominant concentrations of capital in the country. It now operates two markets: the central market and the block trade market. Transactions are settled in cash following the (T+3) system with central depository facilities. Two new indices were launched in January 2002—the Most Active Shares Index (MADEX), which will monitor the 10 most liquid stocks on the exchange, and the Moroccan all-Share index (MASI), which will replace the benchmark CSE index covering all stocks listed.
Market capitalization at the end of 2004 was $25 billion, and the turnover ratio of traded stock was 9.1%. At the end of 2004 there were 52 companies listed on the Casablanca Stock Exchange.
The large majority of enterprises are funded through the banks. Since banks rely on longstanding business relationships between loan officers and their clients, they tend to require a lower level of public disclosure than would be sought from a publicly listed company. Thus there is less pressure on companies to provide the accountability structures associated with good corporate governance. The Conféderation Générale des Entrepreneurs Marocains (CGEM) recently published a survey of businessmen showing that 41% of investors in Morocco would be willing to pay a premium, however, for a well-governed company. And more companies were expected to go public in 2006 to take advantage of certain tax incentives.
International Transparency Standards
Morocco qualified on December 15, 2005 to participate in the Special Data Dissemination Standard of the IMF, which reflects international best practice in the area of economic and financial statistics. Morocco has also engaged with the IMF and World Bank in publishing Reports on the Observance of Standards and Codes (ROSC) for monetary and financial policy transparency, fiscal transparency, banking supervision, securities regulation, insurance supervision, and payment and settlement.
Moody’s and Standard and Poor’s have issued bond ratings for the country.