US embassy cable - 05RABAT1136

UNCLAS SECTION 01 OF 03 RABAT 001136 
 
SIPDIS 
 
DEPT FOR NEA/MAG, NEA/PI AND INL/AAE 
DEPT ALSO FOR EB/TPP, EB/IFD AND DRL/IL 
STATE PASS USTR FOR DOUG BELL 
STATE PASS USAID FOR SARA BORODIN 
USDOC ITA/MAC/ANESA FOR DAVID ROTH 
USDOC FOR FSC/OIO AND CLDP 
USDOL FOR ILAB, NAO AND KARESH 
PARIS FOR ZEYA 
LONDON FOR GOLDRICH 
ROME FOR ROSE 
TUNIS FOR MEPI REGIONAL OFFICE 
 
E.O. 12958: N/A 
TAGS: ECON, EFIN, ETRD, EAGR, ELAB, ELTN, KMPI, MO 
SUBJECT: MOROCCO ECONOMIC HIGHLIGHTS 
 
 
-- Reaping Benefits of Privatization 
-- Firing Phantoms 
-- 2004 Customs Receipts Up 
-- Revised Growth Figures 
-- Daylight Savings 
-- Workday shift 
-- FTA Website 
-- Rabat's Rodeo Drive 
 
--------------------------------- 
Reaping Benefits of Privatization 
--------------------------------- 
 
1.  Sixty-six state-owned companies were fully or partially 
privatized by the GOM since 1993, earning nearly $9 billion 
for the state, according to Abdelaziz Talbi, Director of 
Public Enterprises at the Ministry of Finance.  Morocco 
ranked first in privatization receipts among Arab countries 
and third among African ones, in 2004.  Privatization 
transactions also allowed capitalization of the Casablanca 
Stock Exchange to rise from $590 million to $24.2 billion 
between 1989 and 2004.  The larger companies fully or partly 
privatized during the period were Maroc Telecom and Rgie 
des Tabacs (tobacco distribution company).  From 1992 to 
1996, USAID supported Morocco's privatization program 
through a $25 million project.  According to a recent GOM 
study, privatized companies' turnover increased by 35 
percent on average, dividends improved by 48 percent, and 
taxes transferred to the government went up 55 percent. 
Recent privatizations are "one offs," however, and the GOM 
relies too heavily on privatization receipts to plug fiscal 
deficits. 
 
--------------- 
Firing Phantoms 
--------------- 
 
2.  The Moroccan Government suspended the salaries of 415 
"phantom" civil servants, as part of a crack down on what is 
known in Morocco as "the phantom civil servants" phenomenon. 
Speaking at the House of Representatives, Minister of 
Modernizing the Public Sector Mohamed Boussaid said the GOM 
is studying means to fight the phenomenon of civil servants 
who get paid despite consistent absence and failure to 
fulfill their duties.  Morocco counts about 700,000 civil 
servants whose wages absorb over $7 billion a year, or about 
12.5 percent of GDP.   The World Bank has identified the 
bloated civil service as a major cause of Morocco's chronic 
budget deficits. 
 
------------------------ 
2004 Customs Receipts Up 
------------------------ 
 
3.  Despite the removal of tariffs required by Morocco's 
recent FTAs and liberalization efforts, Moroccan customs 
revenues reached $5.16 billion in 2004, a 6 percent rise 
over 2003.  Customs Director General Abdellatif Zaghnoun 
said the impressive results were due to a 38 percent 
increase in VAT collection as well as similarly steep 
increases in Customs collection of domestic consumption 
taxes. 
 
---------------------- 
Revised Growth Figures 
---------------------- 
 
4.  The GOM revised its 2004 GDP growth to 4.2 percent. 
These final figures contrast with a provisional 3.5 percent 
published early this year and compare unfavorably to the 5.5 
percent growth experienced in 2003.  In February, the 
government statistics body said that the Moroccan economy is 
expected to grow modestly in 2005, forecasting a 2.6 percent 
increase of GDP.  Excluding the agricultural sector, the 
economy is expected to grow in 2005 at 3 percent. 
 
---------------- 
Daylight savings 
---------------- 
 
5.  On May 23, Prime Minister Jettou announced that King 
Mohammed VI had decreed that Morocco will implement daylight 
savings time during summer months.  Local time in Morocco 
will "spring forward" one hour from GMT beginning in July. 
Jettou said that economic considerations -- including 
projected energy savings and increased workday overlap with 
continental Europe (which during the summer has been at 
least two hours ahead) led to the decision.  Morocco will be 
five hours ahead of EDT when the change takes place. 
 
---------------------------- 
Continuation:  Workday shift 
---------------------------- 
 
6.  Prime Minister Jettou announced May 23 that in July the 
government and parastatal companies will adopt "continuous 
work hours" rather than the current two shifts separated by 
a long lunch hour.  Civil servants will work from 8:00 AM to 
4:00 PM with a short lunch pause, breaking the Mediterranean 
"long lunch" tradition that resulted in four rush hours per 
day and lost productivity.  The government emphasized energy 
savings as the main impetus for the change.  The GOM has 
traditionally adopted "continuation" during summer months 
and during the holy Ramadan fasting month.  The new work 
hours are scheduled to begin on July 4. 
 
------------------------------------------ 
MEPI: FTA Website Gets Over 1 Million Hits 
------------------------------------------ 
 
7. On May 26, American Chamber of Commerce (AmCham) 
Executive Director Carl Dawson briefed Ambassador Riley on 
the impact of the U.S.-Morocco FTA Website 
(www.moroccousafta.com), funded by State Department BFIF 
funds and a MEPI small grant.  In 2004, the website logged 
over 1.25 million hits representing over 13,500 individual 
users.  Site visitors downloaded nearly 61,000 files, 
evidence that the website is fulfilling its planned role as 
the initial and primary source of information on the 
agreement.  Top file downloads were: the FTA summaries in 
French and English, the AmCham presentation on accessing the 
U.S. market, and the tariff schedule annexes.  Dawson 
estimated that 54 percent of users were U.S. based, 37 
percent in Morocco, and 4 percent in France, but noted that 
such figures underestimated potential Morocco-based hits due 
to webhosting issues.  Dawson also previewed the site's 
future expansion (also funded by a MEPI Small Grant) to 
include a moderated discussion board and an online database 
for resumes and offers of employment. 
 
-------------------------------------- 
Shop Till You Drop:  Rabat's Rodeo Drive 
-------------------------------------- 
 
8.  Prince Moulay Rachid, younger brother of King Mohammed 
VI, dedicated the largest trade and leisure mega-mall in 
Morocco (second only to a similar one in South Africa on the 
African continent).  The mega-mall, which is built on 26,367 
square meters and cost about $26 million, employs some 1,200 
people, directly and indirectly.  The Rabat complex - 
designed by a Moroccan architect - includes 1,828 square- 
meter ice skating rink, fast-food restaurant, bowling alleys 
and a children's playground.  Some 3,000 people are expected 
to visit the mall daily.