Morocco Names Growth Czar, Plans Shakeup of State Behemoths
Morocco Names Growth Czar, Plans Shakeup of State Airline, Rail
(Bloomberg) --
Morocco’s long-promised plans for an economic restructuring began to take shape as authorities outlined a plan to restructure and unload debt-laden state assets and appointed a growth czar.
First in a firing line that also includes the flagship Royal Air Maroc state carrier was the railway monopoly, ONCF, that will see 10 billion dirhams ($1b) in debt restructured through a mixture of long-term loans and bonds guaranteed by the state, the railway’s chief, Mohamed Rabie Khlie, told reporters Wednesday.
“ONCF needs a new growth model just like the Moroccan economy needs a new growth model,” Khlie said, adding that the company aims to complete the debt restructuring by 2021.
The company will try to get as much as possible from the bond market and is considering maturities of 15 or 30 years. It also plans to sell the storied La Mamounia to local institutions, he said.
The announcement came a day after King Mohammed VI named Chakib Benmoussa, a former interior minister who’s now ambassador to France, to lead a committee charged with developing a new growth model for the North African nation’s stunted economy, the state-run MAP news agency reported.
Earlier Tuesday, the Finance Ministry outlined a plan to slim down some state assets by devising a restructuring plan for enterprises that also includes highways authority ADM.
Taken together, the efforts show the government finally fulfilling vows first made about two years ago to tackle growth and the revival of a $118 billion economy battered by a poor harvest and weak demand from its key European export market. Officials have already reduced their projections for 2019 economic growth to 2.7% from an earlier figure of 3%.
The International Monetary Fund said earlier in November that while the country’s overall economic policies are “sound,” the government must press ahead with fiscal consolidation to help lower public debt-to-gross domestic product ratio and secure “priority investments and social spending.”
The revival plans come at a pressing time, as eastern neighbors Algeria and Tunisia are either in the midst of upheaval or struggling to rebuild their own economies and Libya remains mired in conflict. Morocco has avoided much of that unrest, but the economy -- heavily reliant on phosphates, agriculture and tourism -- has been struggling to meet rising social needs.
Key to this fight is patching up deteriorating finances, a fight that authorities are addressing with currency reforms and the privatization of state enterprises, some of which have been criticized by the country’s audit court as inefficient and suffering from poor planning.
Under the plan outlined by the ministry in a report released Tuesday, the aim is to “ensure the sustainability of their business model.”
The overhaul of the companies seeks to focus on their core activities by setting clear development strategies that can raise private-sector involvement, according to the ministry.
More state-owned firms will probably be slated for privatization, and “the institutional reform” of some of them should add more assets to the list, it said. A total of 400 state-owned companies and affiliates had debt of about 197 billion dirhams ($20.4 billion) in 2018, the ministry said.
The firms’ investments are set to slow in the coming year, rising just 2% in 2020 before decreasing about 1% in 2021 and a further 9% the year after, the ministry said.
Power and water utility ONEE is expected to make more deals with the private sector before it’s broken up into three units, the ministry said, without giving a time-frame. It also said ONCF would split infrastructure development from running the network in 2022 as part of a move to encourage private sector investment.
To contact the reporter on this story: Souhail Karam in Rabat at skaram10@bloomberg.net
To contact the editors responsible for this story: Lin Noueihed at lnoueihed@bloomberg.net, Tarek El-Tablawy, Paul Abelsky
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