1

Prepared by Sec A Group 6

Abhay Sharma 1A Aniruddh Srivastava 9A

Devansh Doshi 16A Manasi Jain 23A

Sachin Gupta 38A Vidooshi Joshi 55A

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Table of Contents Kingdom of Morocco .............................................................................................................................. 3

Morocco-Economic Environment ......................................................................................................... 3

Morocco-Political Environment ............................................................................................................ 3

Morocco-Social & Cultural Environment ............................................................................................... 4

Morocco-Technological Environment ................................................................................................... 4

Morocco-Ecological Environment ......................................................................................................... 4

Morocco-Legal Environment ................................................................................................................ 5

Macroeconomic Progress........................................................................................................................ 6

Economic Figures ................................................................................................................................. 6

Growth ................................................................................................................................................ 6

Macroeconomic Policy ........................................................................................................................ 7

Morocco Balance of Payments Summary ............................................................................................. 8

Morocco Current Account ................................................................................................................... 8

Morocco Unemployment Rate ............................................................................................................ 8

Morocco Industrial Production ............................................................................................................ 9

Morocco Consumer Price Index (CPI) ................................................................................................ 10

Morocco Inflation Rate ...................................................................................................................... 10

Macroeconomic Problems and Recommended Solutions ..................................................................... 11

Problem Of Unemployment .............................................................................................................. 11

Policies to Reduce Unemployment .................................................................................................... 11

Problem Of High level of Current Account and Budgetary Deficit ...................................................... 12

Policies to reduce High CAD and Budgetary Deficit ............................................................................ 12

References ............................................................................................................................................ 15

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KINGDOM OF MOROCCO Kingdom of Morocco is located in the northwest of the African continent. It is bounded on the north by the Strait of Gibraltar and the Mediterranean Sea, south by Mauritania, east by Algeria and the Atlantic Ocean. We would now elaborate on the Political-economic-social-technological-ecological-legal aspects of Morocco.

Population 34,343,219

Capital Rabat Official Languages Arabic,

Ethnicity Arab-Berber, Jews

Currency Moroccan Dirham(MAD) 1 Moroccan Dirham equals 0.12 US Dollar

Table 1.1 Demographics of Morocco

MOROCCO-ECONOMIC ENVIRONMENT Morocco’s economy is relatively diverse. Key sectors include agriculture, tourism, mining, and textiles and apparel. Through internal and Western Saharan mines, Morocco controls over 75% of world reserves of phosphates, which are used in fertilizers—and of which the United States is the world’s largest consumer. Remittances from emigrant workers, mainly in Europe, are another source of foreign exchange and a social safety net. Morocco actively encourages foreign investment and trade, including through a Free Trade Agreement with the United States and an Advanced Status agreement with the European Union. Morocco has a sound economic model which combines openness, liberalization and newly introduced structural reform which has kept the economy going under tough international and domestic conditions. Agriculture sector, which employs almost half of the active population, accounts for 20% of the GDP. The sector is extremely vital to the economy. The main export commodities are clothing & clothes, electric machinery, inorganic chemicals, fish & other seafood. Morocco’s two main import partners are the European Union and China. USA In 2006 Morocco entered into a bilateral Free Trade Agreement (FTA) with the United States; it remains the only African country to have a FTA with US. Europe Morocco has close ties with the European Union (EU), although relations are occasionally troubled by issues of human rights and the Western Sahara. The EU provides considerable aid and has been strongly supportive of Morocco’s political reforms. France and Spain, Morocco’s former colonizers, have been its major bilateral donors, trading partners, and sources of foreign direct investment Morocco faced twin problems:

Economic slowdown in Europe, which is the chief economic partner and importer

Failed crop The above two resulted in slowdown in growth to just 3.2% in 2012. But apart from economy Morocco faces challenges on social life. From inequality and social disparity to very high unemployment rates especially amongst young men and women is a big challenge for the state. Uniqueness of Morocco

More economic transactions with the EU than its neighboring countries.

Special Strategic partnership with GCC (Gulf Cooperation Council), even though it’s not a part of the gulf MOROCCO-POLITICAL ENVIRONMENT

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Morocco has had a relatively stable political environment since the 2011 revolution. The constitution was revised after the demonstration by the people in Feb 2011. Under the new and revised constitution the parliament and the Prime Minister were given more powers, however the King still remains the Head of the state and the "Commander of the Faithful" as a direct descendant of the Prophet Mohammed. Morocco is a constitutional monarchy with an elected parliament i.e. the head of the state is a monarchy. Morocco has a multi‐party system and parties must reach a political consensus to be able to form a government coalition with the main parties: L’USFP, le PI, Le PJD, Le RNI. On 25 November 2011 the moderate Islamist Justice and Development Party (PJD) did best in the legislative elections by winning 107 of the 395 seats to be filled. The new Prime Minister Abdelilah Benkirane (PJD) is recommending continuity in economic policy. However despite the institutional changes, the power remains with a few elite. The Western Sahara issue continues to hamper its relations with Algeria after the failed informal negotiation between Morocco and the Polisario Front under the auspices of the United Nations (UN) in 2011. MOROCCO-SOCIAL & CULTURAL ENVIRONMENT Despite Morocco’s economic progress, the country suffers from high unemployment and poverty. Unemployment (especially among young people), poverty, and illiteracy (especially in rural areas) remain high; according to the World Bank, 8 million Moroccans, or one in four, live in “absolute poverty or under its constant threat.” Socioeconomic hardships drive emigration and social unrest, and may be conducive to radicalization like Egypt and other Islamic states in Africa. Education in Morocco is free and compulsory through primary school (age 15). Nevertheless, many children – particularly girls in rural areas – still do not attend school. Morocco launched the INDH in 2005 to combat poverty in rural areas and social exclusion and insecurity in urban areas through a participatory approach and by targeting the poorest communities. Morocco, with a score of 25 is considered a collectivistic society. This means that people have a close long-term commitment to the member 'group', be that a family, extended family, or extended relationships. People value relations and business is run on relations. At a score of 70 on Hofstede’s Power Distance, Morocco is a hierarchical society. This means that people accept a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organization is seen as reflecting inherent inequalities existing in the society. Morocco is primarily a Masculine state and emphasis is on performance and competitions where people try to outdo each other. Also Morocco is classified as low on uncertainty tolerance. MOROCCO-TECHNOLOGICAL ENVIRONMENT Morocco has seen rapid development in the technological environment which has helped the state to drive up the development and business. Morocco has had several reforms for Information and Communication technology in 1990’s. The Moroccan government instituted a series of reform efforts that continued to build and leading up to the present-day national ICT plan Maroc Numeric (Digital Morocco). This has helped Morocco be above its neighbors in terms of technology. These were the steps taken by the government for enhancing the technological environment: Expanding private competition and opting for an emphasis on technical requirements, innovation, quality, and access. Programs to develop digital literacy among the older and rural population in addition to those that can effectively cultivate a next generation of e-content and software producers and developers Focusing on e-government and public service provision that is user oriented MOROCCO-ECOLOGICAL ENVIRONMENT Morocco has initiated measures to strengthen the ecological and environmental protection. These have been included under the national charter for the environment and sustainable development (Charte nationale sur l'environnement et ledéveloppement durable) since 2010. But there has been delay in implementation due to financial constraints. Also the awareness and people participation is also low, thus the program has failed to bring about a big change. Climate change has been taking place in Morocco which has led to droughts and downtrend of rainfall. But in 2012 the efforts were increased after donations from EU. The government is also committed to improvement of water quality in order to preserve the agro industry of the country.

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MOROCCO-LEGAL ENVIRONMENT Judiciary of Kingdom of Morocco is an independent branch of Moroccan government. The legal system is mixed legal system of civil law based on French law and Islamic law; Legislative power in Morocco is vested in the government and the two chambers of parliament, the Assembly of Representatives (Majlis Al-Nuwab) and the Assembly of Councillors (Majlis Al Mustahsareen) A referendum was held in early July 2011 approving a new Constitution (post Arab Spring) which included the following important reforms:

The King now has the obligation to appoint a Prime Minister from the party that wins the most seats in parliamentary elections; and the Prime Minister is the head of government and president of the Council of Government with the power to dissolve parliament

The Council of Government is in charge of preparing the general policy of the State

The King retains complete control of the armed forces, foreign policy and the judiciary, as well as the power to choose and dismiss the Prime Minister, and control over matters pertaining to religion

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MACROECONOMIC PROGRESS ECONOMIC FIGURES Over the past few years the economy of Morocco has been characterized by a stable macro economy, low inflation rate and a relatively slow growth. The government continues to enact several and multi-sector reforms and pursues the liberalization of the economy in order to stimulate growth and create new jobs. The 4% growth in 2010 was due to the rebound of the tourism sector, the immigrants’ remittances (transfer of funds) and also the performance of non-agriculture sectors. The Gross Domestic Product (GDP) in Morocco expanded 4.5 percent in the third quarter of 2013 over the same quarter of the previous year. The government is putting serious efforts to diversify the economy away from the agriculture sector, which is very dependent on weather conditions and its instability. From 1999 until 2013, Morocco GDP Growth Rate averaged 5.9 Percent reaching an all-time high of 14.2 Percent in March of 2008 and a record low of 0.5 Percent in December of 1999. Morocco is the fifth largest economy in Africa. Considerable attention has been given to the development of off-shoring services. The GDP growth rate is having difficulties to stabilize. However the strong economic fundamentals along the country’s increasing investment attractiveness put Morocco despite the financial crisis, in a position projected to grow during the next coming years. A growth that however remains insufficient to reduce the high unemployment rate (10%). The fact that the budget deficit can be relatively supported, gives the country credit credibility in international markets.

Table 2.1 Morocco GDP Growth Rate

GROWTH Growth has been driven by capital accumulation and domestic demand. On the supply side, growth has been mostly driven by strong capital accumulation. Over the period 2002-2012, the contribution of capital accumulation has been close to 45 percent. Labor has been the second factor providing the largest contribution (about 40 percent) while human capital and total factor productivity (TFP) accounted together for less than 15 percent. However, while the contribution of human capital has been rather constant, TFP’s contribution has markedly increased, reaching about 20 percent over the past decade. On the demand side, growth has been exclusively driven by domestic demand (consumption contributing to about 75 percent and investment to about 35 percent). In contrast, net exports have decreased during the past decade, resulting in a negative growth contribution of external demand (about -10 percent).

7.4

3.2

4.9

2.7

4.8 5.3

3.6 4.5

2.2

5.1

12.4

5.7

3.4

5

2.7

7.3

9.1

2

4.9

2

0

2

4

6

8

10

12

14

16

2008 2009 2010 2011 2012 2013

Morocco GDP Growth Rate Percentage Change in Gross Domestic Product

Q1 Q2 Q3 Q4

7

Table 2.2 Growth Indicators comparison over the years

MACROECONOMIC POLICY Fiscal Policy In a difficult economic context, mainly related to the international crisis, Morocco has chosen an expansionist fiscal policy to support domestic demand. Since 2002 the fiscal balance has been through three phases: a reduction of the deficit up to 2006, followed by two years with a small surplus and then a countercyclical period since 2009. At the end of 2012, the budget deficit reached 7.5% of GDP but should be reined back to 5.3% in 2013. To this end a number of steps are planned to increase public revenues. The tax reforms embarked upon several years ago should be continued. These include widening the tax base, strengthening tax administration and elimination of non-productive tax breaks, to improve the net contribution of public institutions and businesses and to get better value from the state’s private domain. In addition, with a view to containing public spending, the government plans to pursue its program to rationalize the state’s life style, strengthen public-private partnerships, reform the Organic Law relating to Finance Law, and speed up reform of public procurement. State investment should continue in 2013, reflecting the determination of the authorities to maintain their backing for economic activity. Monetary Policy Inflation, measured by changes in the consumer price index (CPI), remained at a relatively moderate level in 2012, rising to 1.8% at the end of October. For the whole of 2012 forecasters predict inflation slightly above 1.3%. This inflationary control is the result of a monetary policy that targets inflation and of government intervention. The annual rate of growth of the money supply, as measured by the M3 aggregate, slowed at the end of October, increasing by 3.6% compared with 5.0% the previous year. This reflects a fall in short-term deposits and a lower rate of growth of current accounts, together with a greater fall in the monetary assets of private non-financial companies, as well as a slower rate of growth of household assets. The annual growth rate of bank loans also slowed slightly, from 7.0% in 2011 to 5.4% at the end of October 2012. The Moroccan dirham (MAD) is pegged to a basket of currencies dominated by the euro (EUR) and had appreciated against the euro by 1.0% and fallen by 4.6% against the US dollar (USD) at the end of October 2012 compared with same period in 2011. MOROCCO BALANCE OF PAYMENTS SUMMARY

Table 2.3 Balance of Payments Summary

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Morocco recorded a trade deficit of 14,722 MAD Million in November of 2013. Balance of Trade in Morocco averaged -8767.43 MAD Million from 1998 until 2013, reaching an all-time high of -1,254.60 MAD Million in January of 1999 and a record low of -22921 MAD Million in May of 2012. Phosphates and textiles are central to Morocco's export industry. Other exports items include electric components, inorganic chemicals, transistors, citrus fruits, vegetables, and fish. Morocco main exports partners are European Union countries with Spain, France and Italy being the most important. Morocco imports crude petroleum, textile fabric, telecommunications equipment, wheat, gas and electricity, transistors, plastics. Its main imports partners are: France, Spain, China, Italy, Germany, United States and Saudi Arabia. MOROCCO CURRENT ACCOUNT

Table 2.4 Current Account Balance as a percentage of GDP over the years

Table 2.5 Current Account Balance over the years

Morocco recorded a Current Account deficit of 24,920.80 MAD Million in the second quarter of 2013. It averaged -4691.42 MAD Million from 2001 until 2013, reaching an all-time high of 11697 MAD Million in the third quarter of 2002 and a record low of -28726.70 MAD Million in the second quarter of 2012. MOROCCO UNEMPLOYMENT RATE Unemployment Rate in Morocco increased to 9.10 percent in the third quarter of 2013 from 8.80 percent in the second quarter of 2013. From 1999 until 2013, Morocco Unemployment Rate averaged 10.7 Percent reaching an all-time high of

7265.8

-3392.3 -527.9 -1451.6

-6958.3

-12769.5

-7503.9

-17865.9 -18176.5

-8184.9

-16515.7

-22414.1

-5676.9

-7749.7 -7096.6

-15327.3

-20602.3 -17420.8

-9001.6

-13419.8 -16456.6

-20013.2

-28726.7 -24920.8

-35000

-30000

-25000

-20000

-15000

-10000

-5000

0

5000

10000

2008 2009 2010 2011 2012 2013F

Morocco Current Account (MAD million)

Q1 Q2 Q3 Q4

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15.1 Percent in September of 1999 and a record low of 7.8 Percent in June of 2006. On the whole, the growth rate of the economy will not reduce the unemployment rate significantly, also taking account of the constant rise in the number of first entrants on the labor market. Urban areas saw particularly strong job growth, and the services and construction sectors were the two leading drivers of job creation. Services generated some 152,000 new jobs, with the business process outsourcing (BPO) and telecoms sector proving particularly dynamic. Meanwhile, government infrastructure projects, as well as heavy private investment in real estate and tourism helped boost the construction sector, which created 80,000 new jobs in the second quarter of 2013.

Table 2.6 Unemployment rate as a percentage of Labor force over the years MOROCCO INDUSTRIAL PRODUCTION Industrial Production in Morocco increased 0.50 percent in the third quarter of 2013 over the same quarter in the previous year. Industrial Production in Morocco averaged 3.22 Percent from 2000 until 2013, reaching an all-time high of 9.40 Percent in the first quarter of 2000 and a record low of -4.40 Percent in the fourth quarter of 2008. In Morocco, industrial production measures the output of businesses integrated in the manufacturing sector of the economy.

Table 2.7 Industrial Production Growth of Morocco

9.6 9.6 10 9.1

9.9 9.4 9.1 8 8.2 8.7

8.1 8.8

9.9 9.8 9 9.1 9.4 9.1 9.5 9 9.2

8.5 8.7

0

2

4

6

8

10

12

2008 2009 2010 2011 2012 2013F

Morocco Unemployment Rate (% of Labor Force)

Q1 Q2 Q3 Q4

-1.6

0.6

2.6 3.7

-0.7 -1

1.8 2.1 1

0.2 1.5

-0.3

2.6 1.7 1.5

-4.4

4 2.9 3.3

0.2

-6

-4

-2

0

2

4

6

8

2008 2009 2010 2011 2012 2013F

Morocco Industrial Production

Q1 Q2 Q3 Q4

10

MOROCCO CONSUMER PRICE INDEX (CPI) Consumer Price Index (CPI) in Morocco decreased to 113 Index Points in November of 2013 from 113.70 Index Points in October of 2013. Consumer Price Index (CPI) in Morocco averaged 108.26 Index Points from 2007 until 2013, reaching an all-time high of 113.70 Index Points in October of 2013 and a record low of 101.20 Index Points in February of 2007.

Table 2.8 CPI of Morocco over the years MOROCCO INFLATION RATE The inflation rate in Morocco was recorded at 1 percent in November of 2013. Inflation Rate in Morocco averaged 1.79 Percent from 2008 until 2013, reaching an all-time high of 5.20 Percent in May of 2008 and a record low of -1.60 Percent in December of 2009.

Table 2.9 Inflation Growth Rate of Morocco over the years

98

100

102

104

106

108

110

112

114

116

2008 2009 2010 2011 2012 2013F 2014F

Morocco Consumer Price Index(CPI)

-3

-2

-1

0

1

2

3

4

2008 2009 2010 2011 2012 2013F 2014F

Morocco Inflation Rate Annual Change in Consumer Price Index

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MACROECONOMIC PROBLEMS & RECOMMENDED SOLUTIONS

PROBLEM OF UNEMPLOYMENT Overview Morocco's unemployment rate, a cause for concern, though has been dropping steadily in 2008, on the back of job growth in services and construction but on the whole, the growth rate of the economy will not reduce the unemployment rate significantly, also taking account of the constant rise in the number of first entrants on the labor market. According to the World Bank, 8 million Moroccans, or one in four, live in “absolute poverty or under its constant threat.

With 30.5% of Morocco's population of 34.3 million aged 14 or younger, according to the EIU, job creation for the young is one of the government's major priorities. 2013 data indicate that 17.6% of those in the 15–24 age group are unemployed. This rises to around one third in urban areas—rural communities often employ the young in agriculture, including on the family farm, as soon as they leave school, contributing to relatively high youth employment rates.

Consequences of High Unemployment 1. Low level of Production and High Poverty With consistent high level of unemployment (~ 9%), consumer spending has decreased over the period which has led to a sluggish growth in economy, as 3.2% growth in 2012 makes it impossible to reduce high level of employment. Weaker tourism revenues and export demand, especially from Europe which accounts for 60% of trade, has been drag on growth in recent years. Apart from this, cost of living has become unbearable to most of the sections of society.

2. Socioeconomic Hardships Socioeconomic hardships like high level of unemployment drive emigration and social unrest and can be conducive to radicalization. Though the Govt. has attempted to address discontent through social programs, subsidies etc. but it has taken a toll over the Morocco’s economy. Regional instability and social unrest has brought about a decline in investor confidence and highlighted many social issues.

POLICIES TO REDUCE UNEMPLOYMENT Fiscal Policy As Morocco has chosen an expansionist fiscal policy to support its domestic demand, it can start tax reforms which were embarked years ago. With the widening of tax base and strengthening of tax administration, Govt. can increase its revenue and thereby can provide Job Opportunities and unemployment allowance, which is indeed a redistribution of income.

Also, Govt. should seek to attract Foreign Investment into priority sectors like textiles, electronic components, Offshore Services and Tourism (a highly labor-intensive sector) and thereby helping to reduce unemployment.

Monetary Policy In the absence of any real inflationary pressures, the Central bank can increase money supply (M3) to boost the borrowing and hence the investment, which will help in reducing unemployment and attaining high growth level.

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Also, the Central bank can increase the Expected Inflation, by announcing its measures and policies well in advance. It will lead to proponents of Expected inflation to believe the central bank policies. With the increase in expected inflation, it is quite possible that Inflation will increase in coming years according to Modified Philips Curve and because of counter-cyclical relationship between inflation and unemployment, higher the inflation will decrease the unemployment rate in the economy.

Apart from above, since Agriculture contributes 20% of GDP and employs 40% of total labor force, Govt. can introduce favorable policies (fertilizer Subsidies, loan waivers to farmers) to strengthen this sector.

PROBLEM OF HIGH LEVEL OF CURRENT ACCOUNT AND BUDGETARY DEFICIT Overview With the sharp rise in imports of oil, vehicles and general purpose equipment, it shows the country’s inability to meet some of the consumer needs through Domestic production and thereby leading to worsening of trade balance. In 2012, current account deficit amounted to 8.6% of GDP. Rate of coverage of imports by exports fell to 48%.

Rising prices of raw material in the world market made it necessary for Morocco to emphasize on domestic demand to counter the effect of declining demand from abroad. This in turn, led to worsening of Budget Deficit and recourse to foreign debt. In the beginning of 2013, treasury debt had deepened to 58% of GDP.

Worsening of Budget Deficit (7.5% in 2012) and Current account deficit (8.6% in 2012) led the credit agency S&P (Standard and Poor) to downgrade it’s rating of country’s long term debt from Stable to Negative, which is a setback to the potential investors and Morocco’s planning of raising capital through Debt.

Consequences of High Current Account and Budgetary Deficit 1. Low level of Investor Confidence Rise in current account deficit and budgetary deficit led to credit agencies like (S&P, Fitch or Moody’s) downgrading the country’s investment grade or increasing the credit risk on Govt. issued Bonds, which had happened in Morocco’s economy when S&P lowered its long term debt rating from positive to negative. Downgrading of Investment Grade makes it very difficult to attract investors, which has led to low job opportunities and lower growth in economy.

2. Restrictions in gaining funds from International Bodies High level CAD also posed hurdles for Morocco in gaining monetary funds from bodies like IMF, World Bank at cheaper cost, which led to Govt. inability to perform social sector reforms like increase in allowance or subsidies to the needy, which in turn had led to high income disparity over the years. Also, it restricted the Govt. ability to increase the investment in various sectors to create different job opportunities for people.

POLICIES TO REDUCE HIGH CAD, BUDGETARY DEFICIT

1. Boosting Exports and Introduction of Economic Reforms

Govt. should emphasize on boosting exports by providing perks like preferential treatment, Tax Benefits. Also, reforms in Automobile sector, Pharmaceutical, Aeronautical, Food processing, electronics etc. will help in gaining foreign investment and boosting of demand.

Morocco’s main industries like Textile and Leather, which had fared less well in recent past due to weak demand in Europe and a strong competition from Asian textile producers, should try to seek newer markets of Latin America and should develop competitive strategies to overcome the threat from Asian producers.

Also, country should look towards reducing imports of non-essential products like food and consumer goods and develop alternative source of energy to reduce the dependency on Oil imports, which accounts for 40% of total imports.

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Though recently Govt. had cut the petrol and diesel subsidies and reduced tax exemptions, especially in agriculture sector but at the same time fiscal discipline should not be allowed to translate into a weakening of social protection for the most vulnerable groups, or come at the expense of investment in infrastructure, education and health.

Apart from these, Govt. can look forward to legalize cannabis cultivation as Morocco is currently the leading producer and exporter of cannabis in the world, responsible for 42% of the global supply and can make the crop available for therapeutic and industrial use, which in turn will help in reducing the CAD.

2. Tax Evasion Amnesty

Morocco has a long history of tax evasion and is a rampant phenomenon here. According to the US based Political Economy Research Institute (PERI) tax evasion from 1970 to 2012 period amounted to US $89bn, equivalent to US$2.1bn per year. Govt. can provide tax amnesty by applying a one-time penalty on its citizens or corporations and guarantee their anonymity and protection from prosecution.

It will help the Govt. to provide a one-off boost to public revenue as well as improving liquidity in the domestic banking system. Repatriation of foreign assets would help revitalize Morocco's economy and increase the country's reserves in foreign currency, which in turn reduces the CAD & budgetary deficit from as high as 7.5% of GDP.

3. Revival of Tourism Sector

As the tourism sector contributes around 7-8% of GDP, Moroccan Govt. should emphasize on revival of this sector. Policies like Visa on Arrival, increasing number of flights between the countries like Saudi Arabia and Gulf countries which have high per capita income can boost the tourism sector.

Also, Morocco can benefit from serious political turmoil in countries like Egypt, Tunisia etc. By diversifying the source of foreign visitors and active marketing campaign can help the Govt. in reviving this sector. Though the number of tourists visiting Morocco in Jan-Sept period totaled 7.8mn, which is 10.4% increase on a year on year basis but the tight grip on spending led to just 1% increase in revenue, after contracting 1.4% in previous year (2012). Indeed, taking into account inflation of 1.7% in the 12 months ending in September, it actually represents a reduction in tourism receipts in real terms. In this way, Tourism sector revival can help Govt. in bridging CAD and budgeted deficit.

4. Monetary Policy

Since the Moroccan economy is embroiled with High CAD and High Budgetary deficit, Central Bank of Morocco can implement Expansionary Monetary Policy as it can bear a slight increase in inflation given that it is at a record low. With the Expansionary Monetary Policy, money supply (M3) will increase in the economy and as a result Interest rate will come down and as a result Investment will increase as well as the Net Export. Increase in Net export can significantly reduce the CAD.

Also, with the increase in investment, GDP will increase (i.e. increase in production level), which in turn will reduce the unemployment and will increase the Disposable income. Increase in Disposable income will lead to higher spending by the public and higher Govt. revenues. In this way, Central Bank of Morocco can help in reducing the Budgetary Deficit.

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REFERENCES

1. web.worldbank.org 2. imf.org 3. tradingeconomics.com/morocco 4. economywatch.com 5. africaneconomicoutlook.org 6. wikipedia.com 7. elibrary-data.imf.org/ (IMF e-Library) 8. www.ilo.org/global/statistics-and-databases/ 9. www.economist.com (Economist) 10. www.cmie.com 11. www.hrw.org human rights watch

12. www.fas.org/ federation of American scientists

13. unctad.org/en/PublicationsLibrary/aldcafrica2013_en.pdf

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