Moroccan Elections Focus on Economic Issues

In this second in a MATIC series looking at the role of economic growth issues facing Morocco, we review the party platforms published in advance of the November 2011 elections to describe the economy as a dominate theme in the elections.

Despite the overwhelming approval of Morocco’s new constitution in July 2011 referendum, some demonstrations persisted into that fall. The focus of many of the protestors was a call for greater economic opportunities, transparency in decision-making, and jobs for the unemployed. As parliamentary elections drew nearer, these criticisms were taken up by many of the major political parties which sought to incorporate them into their own electoral campaigns.

The two political frontrunners—Istiqlal and the Justice and Development Party (PJD)—promised to take actions to reduce wealth disparity, create jobs, promote transparency, and boost development. Both parties guaranteed economic reforms focusing on unemployment, tax reform, international trade and investment, and poverty reduction. They also listed education and legal reforms as part of their economic growth strategies.

The PJD set an ambitious seven percent annual economic growth rate as its target, while Istiqlal committed to five percent, a figure consistent with the average rate from 2007 – 2011. The PJD vowed to reduce overall unemployment by two percent, which would require creation of over 200,000 jobs. Both parties promised to take actions to lower the youth unemployment rate, which had reached nearly 30 percent in the fall of 2011.

Both parties mentioned expanding The Compensation Fund, a social safety net financed by both the State and private enterprises that is primarily aimed at financing medical care and promoting education for children from poor families. Istiqlal emphasized the importance of the fund, but suggested adjusting its support base in order to minimize its impact on the budget deficit.

Both parties also promised to improve standards of living and support for the middle class. Istiqlal vowed to fund professional schools (vocational training) and close the gap in social inequalities by improving job focused education. The PJD pledged to increase the monthly minimum wage by over 25 percent, to approximately $370.

In an effort to encourage foreign and domestic investment, the PJD committed to reducing the company tax from 30 percent to 25 percent, and to cut the value added tax (VAT) from 20 to 15 percent. Abdelilah Benkirane reaffirmed his party’s commitment to encouraging international trade and investment after being sworn in as Prime Minister. “This new government has a true will for reform and we will keep all the promises we made. We will do everything to encourage foreign and domestic investment to create a climate of prosperity.”

The victory of the PJD, which captured the largest number of votes, was interpreted both as a validation of their hard work and detailed reform and growth programs as well as a repudiation of the traditional parties whose past performance did not inspire those supporting broader and continuing reforms.

With a new constitution and strong popular mandate to promote economic growth in all sectors and at all levels, the new government began drafting its program, which was presented to the Parliament for approval in early April. Our next segment will take a look inside the new budget and weigh opportunities for stimulating stronger economic performance in light of weakening European markets and projected low agricultural yields.

Sydney Upchurch contributed to the writing of this article, which originally appeared on Morocco on the Move.

Confronting Challenges to Economic Growth in Morocco

In the coming months, MATIC will take a look at a core issue being confronted by the new government in Morocco: the challenges to economic growth ranging from a mismatch between the educational system and the job market, to issues facing entrepreneurs, investors, and the government in attracting much needed investment dollars. While the previous government encountered these issues, the projected fall in agricultural production in 2012 due to drought conditions, the negative impact of the EU economic setbacks onMorocco, and continued job related demonstrations in various cities have reinforced the focus on economic growth for the new government.

We will look at four topics in this series: the Moroccan economy in 2011, before the new government assumed power in 2012; the economic development program and budget passed by the new government to stimulate growth and provide employment; key players and programs addressing economic growth issues; and the interplay between Moroccan priorities and regional economic opportunities.

2011 – Indicators drifting downward

As 2011 drew to a close, Morocco’s ability to sustain its hitherto impressive growth rate of 4-5% began to decline. Although the unemployment rate dropped to 8.5% in the 3Q from 9.1% and inflation was also on a downward trajectory owing partially to a decrease in food imports, poverty and unemployment remained at unsustainable levels.

The IMF credited Morocco with “several years of sound macroeconomic policies and political reforms” that insulated it from the 2008 global financial crisis. But it also urged Rabat tackle its mounting subsidy bill and head off a potential debt crisis. The government responded to the Arab uprisings by expanding social welfare programs, increasing food and energy subsidies, and raising public sector wages – all adding to deficits that the government could not maintain. In addition, the global recession hurt demand for Moroccan exports, further aggravating its trade deficit and remittances from the Moroccan diaspora.

Both the IMF and the OECD pressed for further improvements to business regulations, corruption, and economic diversification. The government responded with $206 million public-private sector initiatives in telecommunications, transport, finance, and property development that have promising responses from international investors. Yet challenges carried over into 2012. The decline in agricultural production, which employs 40% of the labor market and contributes 15% to GDP when rains are abundant, started the setbacks. Morocco’s dependence on foreign energy supplies limited Rabat’s options as energy prices shot up, adding impetus to the government’s efforts to rapidly ramp up renewable energy programs, and wealth disparity became more evident based on the government’s own analysis.

Heading into 2012, the new government found that it was not immune to demonstrations demanding immediate jobs and reforms. This background sets the stage for the economic program passed by Parliament in mid-April, and is the subject of the next segment.

David Forscey contributed to this article, which was originally published on Morocco on the Move.

Muslim voices Challenge Qualms of Islamists in Power

Representatives from Islamist parties in Egypt, Jordan, Morocco, and Tunisia came to Washington last week to talk about the future of democracy under Islamist-led governments. They were uniformly impressive and well-prepared to challenge key concerns being voiced about Islamists in government: support for human rights, gender equality, protection of minorities, and the direction of their foreign policy priorities.

Moroccan American Center staff attended two events—a luncheon at CSIS featuring the Moroccan Minister of Communications, Mustapha Khalfi, and a day of panels at the Carnegie Endowment for International Peace (CEIP) that included the Communications Minister and representatives from Ennadha in Tunisia, the Freedom and Justice Party in Egypt, the Moslem Brotherhood in Jordan, Egypt, and Libya, and others.

It is not a stretch to say, based on the CSIS session that I attended, that they are quite aware of US concerns. Minister Khalfi has spent time previously in Washington and came ready to answer with details of how the new Moroccan government is facing an array of social, political, cultural, and economic issues that are the test of the new constitution and the new government.

The Minister was quite clear about how the new government intends to move forward. After recognizing the King’s role in framing the constitutional and reform process, Khalfi raised other factors that made Moroccoan exception to the upheavals in the other Arab uprisings. He mentioned the political culture of coalition-building that has been a constant in Morocco, particularly on the local level. This experience has been quite useful as the major players and issues are clear, making negotiations more transparent and to the point. Also, the role of civil society was strongly emphasized as a means for the public to mobilize to focus the attention of the Parliament and political parties on their issues.

To Khalfi, the core challenge is implementing the new constitution by concretizing legislation in a number of key areas: power-sharing; enshrining respect for the multi-dimensional Moroccan identity; reshaping the legal code to protect freedoms and liberties; proceeding with regionalization, which includes political, economic, cultural, and social issues and is the key to resolving the Western Sahara crisis; and ensuring good governance through enhanced transparency, accountability, and reform of the judicial system. The Minister said that at least 40 laws need to be passed as part of the initial implementation process.

Other issues addressed by Minister Khalfi included the importance of rebuilding public trust in the political process, the next test being the upcoming local elections; grappling with the specter of the country’s economic and social ills; re-orienting the economy away from dependence on a Europe that is in crisis; and building a strong basis for regional cooperation and stability.

The CEIP presenters were equally articulate, arguing that the real test of Islamists in power is just beginning. The final verdict will rest on how well democracy and Islam are integrated. The question is not which existing model works best; the answer is what meets the people’s expectations in each country.

This article was originally published on Morocco On The Move.