Economic Monitoring Committee Announces Morocco’s Recovery Plan

Economic Monitoring Committee Announces Morocco’s Recovery Plan

mohamed benchaaboune

Morocco’s Economic Monitoring Committee (CVE) has launched a series of new measures to help relaunch the Moroccan economy after the COVID-19 crisis. The committee held its eighth meeting on Thursday, May 21.

The main solution the committee implemented to support Moroccan businesses recover is a loan guarantee plan, financed by the state treasury. The system will cover all Moroccan companies, both public and private, that sustained damage during the COVID-19 pandemic.

The plan will allow businesses to apply for loans to finance their operations with a maximum interest rate of 4%. The repayment of the loans can be spread over a period of seven years, with a grace period of two years.

CVE’s objective is to mobilize resources to boost the economy during the second half of 2020 in order to create job opportunities, adhere to payment deadlines, and restore confidence between economic partners.

To guarantee the loans, the Moroccan Government will finance two different schemes. For the first plan, titled “Relance TPE,” or “relaunch of micro-sized enterprises,” the state will guarantee 95% of loan values granted to micro-sized businesses, small shops, and craftsmen. TPE includes businesses with an annual turnover of less than MAD 10 million ($1 million). The loans’ value can be as high as 10% of the turnover.

The second plan, “Damane Relance,” or “guarantee relaunch,” targets small, mid-sized, and large businesses with a turnover higher than MAD 10 million. Under the scheme, the state will guarantee between 80% and 90% of the loans’ value. The loans can reach the turnover value of 1.5 months for industrial companies or one month for other businesses. However, 50% of the loan must be used to pay suppliers.

The CVE has also decided to accelerate the payment of public institutions’ debts to micro-sized businesses. To do so, the committee developed a new mechanism.

Public institutions will prepare a list of the companies they are indebted to and will become eligible for special loans dedicated exclusively to the debt payments and guaranteed by the state.

After the list gets approval, the banks granting special loans will transfer the money directly to the concerned businesses in order to reduce payment delays.

Sectoral recovery plans

During the meeting, the monitoring committee discussed a series of sectoral recovery plans, which the General Confederation of Moroccan Businesses (CGEM) developed in collaboration with federations representing the various economic sectors.

The recovery plans will share three main objectives: Restarting the national production chain on stronger foundations, stimulating local demand and encouraging investment, and accelerating the normalization of the country’s socio-economic environment.

Moroccan Ministries will study the proposals in depth to prepare amendments for the country’s 2020 finance bill. The amendments should support a gradual restart of activity in the various sectors of the economy, as well as create the conditions for a healthy economic recovery.

According to the committee, the recovery plans should enable Morocco to make a qualitative leap in certain fields, such as health, education, renewable energy, and digitization, while maintaining its sovereignty and resilience to external shocks.

The plans should also lay the foundation for a “pact for economic recovery and employment,” expressing the common ambition of public institutions and private businesses to boost the economy through clear commitments.

The gradual restart of economic activity is set to begin after Eid al-Fitr, recalled the CVE. However, businesses should strictly comply with the safety measures set out by CGEM to avoid major outbreaks of COVID-19.

After the religious holiday, all economic activities have the right to restart, except those authorities have explicitly prohibited. Moroccan Ministries will soon formalize the safety regulations businesses must respect to ensure clear communication.

Mitigation of COVID-19’s impact

During the meeting, the committee also reviewed the results of its decisions so far. The credit line “Damane Oxygene” which offered loans to businesses to avoid bankruptcy has so far benefitted 17,600 companies. The loans amounted to MAD 9.5 billion ($966 million).

In April, 134,000 businesses declared 950,000 employees on “suspended” activity. The furloughed employees received MAD 2,000 ($203) monthly stipends, amounting to a total of MAD 1.9 billion ($193 million). The committee validated and paid the allowances on May 13.

For informal workers, the first financial aid operation, covering the month of March, has so far supported 4.1 million households. Approximately 150,000 families are still awaiting the aid but will receive their stipends by the end of the week.

For the second operation, covering the month of April, 3 million families have already received the aid. The remaining households, mostly living in remote areas, will receive their allowances by the end of the month through mobile agencies.

The third operation, covering the month of May, whose application process started on May 21, will follow the same procedure as its antecedents. The CVE has also launched a platform for complaints if applicants do not receive aid.

To accelerate the distribution of stipends, the committee decided to increase the number of mobile agencies to reach Moroccans in remote areas. More than 225 mobile agencies are currently deployed across Morocco.