Morocco

Africa

PIB per Capita (€)
$3,570.0
Population (in 2021)
36.7 million

Evaluación

Riesgo País
B
Clima empresarial
A4
Antes
B
Antes
A4

suggestions

Resumen* (contenido solo disponible en inglés)

Strengths

  • Strategic position on the Strait of Gibraltar and proximity to the European market
  • Institutional stability: attachment to the monarchy and King Mohammed VI, active civil society
  • Sustained relations with Europe, the United States and international donors
  • Substantial inward investment from Europe and outward investment to West Africa
  • Upmarket strategy and industrial diversification

Weaknesses

  • Inequalities (rural poverty, youth unemployment, lack of housing, corruption, etc.) and structural tensions (regional disparities, Islamist-liberal opposition)
  • Dependence on agriculture (12% of GDP and one-third of the population), vulnerability to climatic shocks and rainfall variability (impact of droughts on harvests)
  • Commercial dependence on the European Union, particularly in tourism and industry
  • Weak productivity and competitiveness in the face of competition from other Mediterranean countries such as Turkey and Egypt
  • Dispute over former Spanish Sahara

Intercambios comerciales

Exportaciónde mercancías en % del total

Europa
54%
Brasil
18%
India
5%
Reino Unido
4%
Estados Unidos
3%

Importación de mercancías en % del total

Europa 41 %
41%
China 10 %
10%
Estados Unidos 7 %
7%
Arabia Saudí 6 %
6%
Turquía 6 %
6%

Outlook

This section is a valuable tool for corporate financial officers and credit managers. It provides information on the payment and debt collection practices in use in the country.

Earthquake has not jeopardised recovery

Following lacklustre economic growth in 2022 due to poor cereal harvests, activity accelerated in 2023 thanks to a rebound in tourism, despite the earthquake. On 8 September 2023, the northern slopes of the Haut-Atlas Mountain range were hit by an earthquake that measured 6.8 on the Richter scale, around 75 km south-west of Marrakech, the country's main tourist city. The earthquake occurred in a region which relies on subsistence farming and has little industry and limited infrastructure. Consequently, the economic impact has been very slight, especially since tourism has not been affected. The sector posted record results in 2023 and saw Morocco welcome 14.5 million tourists, an increase of 32% compared to 2022 and 11.5% compared to the pre-Covid year of 2019. This trend is set to carry on in 2024, thereby supporting economic growth given the fact that tourism accounts for 7% of the GDP. Reconstruction efforts will also shore up growth, as well as the expansion of Morocco's share of the global phosphate market as Morocco holds 70% of the world's reserves. In June 2023, the government announced its intention to triple investment in renewable energies over the period 2023-2027, compared with 2009-2022, with the aim of developing the national electricity grid (licensing, green hydrogen production, wind power projects) and securing water resources (desalination plants). In 2024, the manufacturing sector will continue to develop and support growth, via higher value-added exports in the automotive, aeronautical and textile sectors. However, risks are tilted to the downside as the country remains highly vulnerable to drought, which has impacted agriculture. The 2023-2024 season has already been heavily penalised by low rainfall and water shortages, and drought could continue into 2024. Consumption will be sustained by tourist flows, public support, and expatriate remittances. However, it will continue to be held back by persistently high food prices and the sluggish agricultural performance, since the sector employs one-third of the population. As the country embarks on reconstruction, the central bank (Bank Al-Maghrib) is likely to suspend the monetary tightening process that was applied in 2023 and maintain its rate at 3% to cope with inflation, which will continue to fall.

Budgetary pressure eased by international aid

The 2023 budget target of reducing the public deficit to pre-Covid levels (around 3% of GDP) by 2026 has been compromised by the earthquake. The tax reforms introduced in 2023 and 2024 will help mitigate the impact of the earthquake, by improving the corporate tax system through the gradual elimination of the variable standard rate at 20% by 2026. In 2024, food and energy subsidies will be replaced by targeted family allowances to ensure better management of public spending. Nevertheless, these fiscal consolidation efforts will not be enough to prevent the budget deficit from widening in 2024, compared with 2022 and 2023. The government has announced a reconstruction plan, budgeted at USD 11.7 billion, or 8.5% of GDP, which will be spread over five years. It will be financed by an increase in budget spending and a contribution of two billion dirhams (USD 194 million) from the Hassan II Fund for Economic and Social Development. In addition, international aid will ease budgetary pressure in the form of solidarity funds, loans, and multilateral donations. Morocco can count on the USD 5 billion flexible credit line granted by the IMF in April 2023 to help finance its deficit on top of which is a USD 1.3 billion loan granted by the Fund on 28 September 2023 for a period of 18 months to help Morocco cope with climate-related disasters. As a result, the public debt burden will increase slightly in 2024, with an external share of 42% of GDP.

The earthquake did not prevent the current account deficit from narrowing in 2023. The increase in imports associated with reconstruction efforts has been offset by the rise in remittances from the diaspora and international aid. In 2024, tourism receipts will continue to boost the services surplus. Nevertheless, the increase in the trade deficit will slightly widen the current account deficit. Exports will increase with the production of phosphate and the automotive sector, as well as the expansion of the port of Tangiers. However, the rise in imports will be slightly greate, due to infrastructure projects, persistently high world commodity prices and reconstruction. This deficit will continue to be financed mainly by concessional external borrowing and foreign direct investment.

Political stability despite widespread frustration over the high cost of living

Prime Minister Aziz Akhannouch, in power since 2021, heads the Rassemblement National des Indépendants (RNI), the majority party in a centre-right coalition. The next scheduled election for the House of Representatives, the lower house of Parliament, is not expected to take place until September 2026. The country, which is politically stable, faced growing discontent from its citizens in 2023 over high unemployment (12%) and the high cost of living due to recurrent droughts that affect harvests. The earthquake killed 3,000 people and left more than 15,000 homeless. The supplementary budget plan is devoted to emergency aid and reconstruction, and to the social and economic development of the affected region (70% of the amount). The aim is to encourage economic activity and open isolated mountain areas.

In 2024, Western Sahara will be the source of ongoing tensions with the Polisario Front and Algeria. Israel recognised Moroccan sovereignty over this territory in July 2023, and Spain recognised the Moroccan autonomy plan in 2022. The first decision is part of an unpopular rapprochement between the two countries, along with the US, on defence issues, while the other deals with migratory movements between the two shores.

Condiciones de pago y recobro de deuda

This section is a valuable tool for corporate financial officers and credit managers. It provides information on the payment and debt collection practices in use in the country.

Payment

Bank transfers are becoming the most popular means of payment for both domestic and international transactions. Cheques are still commonly used as instrument of payment and also constitute efficient debt recognition titles: debtors may be prosecuted if they fail to pay the amount owed. Bills of exchange also constitute an attractive means of payment, because they are a source of short-term financing by means of discounting, instalment, or transfer. Promissory notes are used to record the financial details of personal debts, business debts and real estate transactions. They are legally binding contracts that can be used in a court of law if the debtor defaults. A promissory note acts as solid evidence of an agreed payment, and subsequently debt in case of dispute.

Debt Collection

Amicable phase

Debt collection must begin with an attempt to reach an amicable settlement. Creditors attempt to contact their debtors through different means (telephone calls, written reminders such as formal letters, emails or extrajudicial notifications, etc.). Amicable settlement negotiations can be intense, and cover aspects such as the number of payment instalments, write-offs, guarantees/collateral, and grace period interest. Moroccan law states that a lawyer can acknowledge the signature of the debtor via payment plans, which are signed, certified, and legalized by the competent authorities in Morocco. The creditors’ lawyer can subsequently use this payment agreement as debt recognition in case of legal action.

Legal proceedings

Morocco has a legal system based on French legal tradition and courts based on Islamic traditions (which relate exclusively to the personal status of litigants). Courts include proximity courts (juridictions de proximité) in charge of settling disputes between individuals, Courts of First Instance (tribunaux de première instance) dealing with all civil matters, Commercial Courts dealing with business disputes, Appellate Courts (cours d’appel) dealing with civil and administrative matters, and a Court of Cassation (Cour de cassation).

Emergency proceedings

Where the debt is linked to a recognised title or promise, it is possible to obtain an order for payment. To do this, an application must be sent to the registry of the competent court. The debt must be proven, liquid (i.e. free), payable and not disputed. If the defendant does not file a defence within eight days, it is possible to obtain an enforceable decision. If the defendant submits a defence within eight days of receiving the order for payment, the case is returned to the ordinary procedure. However, the appeals chamber of the court of first instance or the court of appeal may, by reasoned judgment, suspend enforcement in whole or in part.

Ordinary proceedings

A writ of summons is sent by the creditor’s representative to the relevant court and served by a bailiff to the debtor, who may subsequently obtain legal representation in the period prescribed by the judge and file a counter claim. Several hearings may be required for the exchange of written submissions, transmissions of documents and to produce the relevant evidence.

The main hearing is set by the judge to hear the presentation of the pleadings. Discussions and pleadings are conducted by the judge during the public hearing. The case is then taken under deliberation to allow judges to discuss the means, grounds, and pronouncement that make up the content of the judgment. After the sitting of the judgers, a reasoned judgment is rendered. It can usually be obtained within an average delivery time of 14 months.

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Once all appeal venues have been exhausted, a judgment becomes final and enforceable. Garnishee orders are normally efficient for seizing and selling the debtor’s assets.

According to Moroccan law, commercial courts are obliged to recognize judgments rendered abroad, even if there is no convention signed for this purposes with the issuing country. In order to be recognized and enforced, the original copy of the foreign judgment must be provided to the court with a certificate of non-appeal. When a foreigner gets final judgment that they want to enforce in Morocco and, if not, when seeking enforcement of a Moroccan judgment abroad, they must follow exequatur proceedings. There are two enforcement procedures. The first is uniquely Moroccan, whereas the second is fixed by judicial bilateral agreement between Morocco and other countries, including Germany, Belgium, the United States of America, the United Arab Emirates, Spain, France, Italy and Libya.

Insolvency Proceedings

Insolvency proceedings are regulated by Book V of the Commercial Code. It provides for prevention of difficulties (alert procedure and amicable settlement procedure) as well as formal insolvency procedures (judicial redress proceedings and judicial liquidation proceedings).

Because of the COVID-19 situation, Morocco has taken two measures in the framework of the insolvency proceedings:

The possibility for debtor companies to initiate the procedure to request a grace period to enable them to legally suspend payments (if the insolvency is caused by COVID-19).

The possibility of obtaining a stimulus credit dedicated to companies impacted by COVID-19.

ALERT PROCEDURE

The alert procedure is initiated by a business’ partners or auditors (external auditors hired by the company to rectify the financial situation), who are required to notify the company manager of any opportunities to redress the situation within eight days. If no steps are taken to remedy the situation within 15 days, a general assembly must be convened to take a decision on how to redress the situation based on the auditor’s report.

AMICABLE SETTLEMENT PROCEDURE (CONCILIATION)

Amicable settlement procedures can only be implemented by a commercial company, trader, or artisan, who is experiencing financial difficulties but is not yet cash flow insolvent. Once initiated, the debtor is placed under the supervision of the Court. The Court subsequently appoints an external conciliator for a limited period of three months to assist the debtor in reaching an agreement with its creditors. A settlement can be reached with all creditors or the debtor’s “main creditors”. Creditors are entitled to their entire claim, but the conciliator may propose an arrangement or creditors may assign a portion of the debt if they so wish. Once approved by the Court, all judicial proceedings relating to debts covered by the agreement are suspended for the duration of the amicable settlement agreement.

SAFEGUARD PROCEDURE

This is mechanism is intended to allow a company to reorganize in order to continue to survive. To benefit from it, the company must establish that it is not in a state of cessation of payments. However, in the context of this procedure, it is still possible to negotiate with your creditors, in order to avoid arriving at to this cessation of payments, to the receivership proceedings. It is the company that seizes the court, which pronounces a judgment of opening of the safeguard procedure. The procedure starts with a six-month observation period (renewable once) during which the insolvency administrator, in collaboration with the manager, draws up a “economic and social balance sheet” (BES) for the company: an update on the origin of the difficulties, he current financial situation, the corrective measures to be envisaged and the resulting prospects. During this period, the company takes appropriate measures to correct the situation, and it helps the administrator to develop a backup plan. The adoption of such a plan by the court marks the end of the observation period and the beginning of the actual plan, which can last up to five years. Here again, the manager remains master aboard his company but, above all, the company will benefit from radical measures that the court can only impose:

suspension of maturities of debts;

stop individual prosecutions;

obligation for all creditors to declare their claims;

stop interest rate.

JUDICIAL RECEIVERSHIP

This procedure is only available for debtors that have become insolvent (état de cessation de paiements), but whose financial situation is not irreparably compromised. An insolvency judge and an office holder (the person appointed by the court as part of an insolvency or liquidation; also acts as the syndicate) are appointed by the court. During the process, the debtor company and its management remain in possession of the company’s assets and the debtor continues its business. The receivership procedure can result in either the reorganisation of the debtor’s business or its liquidation. The office holder is required to prepare a report on the situation of the company within four months from the opening of the proceedings. In his report, the office holder will either recommend a continuation plan for the debtor, the sale of the business, or liquidation. The court is then required to reach a decision on the fate of the debtor, based on the report. There is no direct vote by the creditors on the options available to the debtor during the procedure.

JUDICIAL LIQUIDATION

The judgment initiating the procedure makes all the debts immediately due and payable, the creditors within a period of two months must present their claims. Moroccan creditors have two months to submit their declarations; creditors residing abroad have a period of four months. Liquidation proceedings may terminate prematurely before a distribution in liquidation if the debtor has no more debt, the office holder has sufficient funds to pay all the creditors in their entirety, or the debtor does not have enough assets to cover the costs of the liquidation procedure.

Under Moroccan law, there are no specific rules on the priority of claims in the event of insolvency. Nevertheless, there are some privileged creditors such as: the employees, the public treasury, the social agencies, the creditors of a collective conciliation, finally the unsecured creditors.

Last updated: April 2024

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