Witnessing Conflicting Stances on Morocco’s Financial Outlook
Morocco’s Royal Institute of Strategic Studies (IRES) published a report in May 2009 on economic priorities for Morocco, which has not been widely discussed or publicized given the controversial nature of its findings.However it has suddenly appeared in the domestic financial press saying, amongst other things that there could be social unrest. L'Economiste writes that Morocco could run out of foreign currency reserves by 2011.
Meanwhile government sources are still portraying a rosy picture about the country and how Morocco insulated from the current world crisis. Meanwhile, the Monarchy is spending vast amounts of money as in Nador and elsewhere for economic, infrastructural and social development which is a brave and necessary initiative, but will the country’s finances hold up? This dash for growth may be potentially speeding up a financial crisis. This would mean a banking collapse in Morocco similar to elsewhere in the world, as investments into social programs and entitlements like healthcare, pensions and salaries could overwhelm the government. The failure to deal with a huge public sector is also critical. All of that could perhaps explain Fouad Ali Al Himma's recent move towards the opposition just prior to the local elections. I wonder if Al Himma's move was to join with the opposition to get more votes and beat Prime Minister Abbas El Fassi and the Istiqlal coalition. The results turned out to be in favor of Al Himma, making his new party, PAM a more credible alternative if Abbas Al Fassi has to face a vote of confidence in the future. Ironically, King Mohammed VI phoned the politically defeated Al Fassi to express his support to him, stating that he still maintained confidence in him. MAP news agency quoted Al Fassi saying that he was delighted that the King retained confidence in his government.
All of this confusing politicking is likely the result of two events that are tightly inter-related. The first is around the state of the economy and how to message its current performance and future outlook to the public and investors. In this case apparently things may not be as rosy as they are often reported and various groups report conflicting positions as to the health of the Moroccan economy, as stated in the introduction of this opinion piece. The second is more of political nature as the Monarchy is doing whatever it can to stop the Islamists and their PJD party from making any progress toward governance. Both are related in that King Mohammed VI’s strategy of containing the Islamists is to continue to invest in social and economic development to eradicate poverty, a source of potent strength for the Islamists. But the question remains whether Morocco has the resources to sustain the King’s desired investments necessary to stem any growth of the Islamist movement. On the other hand, many see that a slowdown in social and economic progress could provide an opening for the Islamists.
So now Moroccans face two versions of their country’s performance and future. The government's version of “everything is fine and Morocco is shielded from the global financial turmoil,” and the more realistic IRES report, which depicts a drastically different outlook. So for a long-time observer of Morocco, I wonder why the report by IRES was given such prominence now. Is it possible that Al Himma pushed for its public release for whatever end game? Only time will tell.