Q: What actions did you take to cope with the global economic downturn?
A: We decided to take three main approaches. The first was to continue to support growth through domestic demand. This is what we did in 2009 and will carry on doing in 2010. Second, we accelerated structural reform. The financial crisis must be used as an opportunity to prepare for conditions in a post-crisis world. During 2009, we did everything we could from a budgetary perspective to accelerate reform. The third component will be to continue to manage the current conditions and prepare for the way ahead in complete partnership with the banking and private sectors.
Q: How do you plan to better diversify the economy and further reduce unemployment?
A: Diversification started for us five to seven years ago. We orientated the economy towards the export sector - the car industry, aeronautical sector, electronics and high value-added agro industry, as well as the more fashionable end of the textile market. We are also developing service sector activities geared towards offshoring as well as enhancing sea products - fishing in particular - with new hubs to process seafood. Renewable energy such as solar power is also a priority, together with tourism, real estate and modernising agriculture. Other emerging sectors are being developed such as logistics and financial services. We are pursuing diversification and this is supported by education and training programmes.
Q: What are your fiscal priorities for 2010 and beyond?
A: We are currently introducing significant reforms to reduce the tax burden. In 2008 we reduced corporate tax from 35% to 30% and our objective is to reduce this to 25%. Income tax was decreased by four percentage points between 2009 and 2010. It was at 42% and has been lowered to 38% for higher bands. Having said that, all the bands have been reduced - the average [income tax] for a company is about 18% to 20%. In 2011 and 2012 we are going to reduce value-added tax from 20% to 18%. So we would only have two rates left, one at 10% and one at 18%.
Q: Do you plan to continue slashing tax rates and can Morocco afford it?
A: In the medium term we intend to continue to reduce that rate based on the economy's ability to generate resources. All of these tax reforms are completely supported by the state's budget, unlike the situation in Europe. Overall, we are trying to reduce the tax burden and broaden the taxable base.
Q: How do you plan to reduce the country's deficit and debt?
A: Within 10 years, debt was reduced from 68% of gross domestic product (GDP) to 46% today. Over the past three years we've been able to reduce public debt by 15 percentage points against GDP. If you look at the make-up of public debt today you will see it has been completely restructured. Foreign debt only represents 20% of overall debt.
Q: What are your investment priorities looking to 2010?
A: We are developing investments in relation to the logistical conditions within Morocco. We are going to expand the Mediterranean port of Tangiers and increase its 3.5 million container capacity to 8 million - making it the most significant port in the region. We are also developing a new port on the Atlantic coast. We have started with an energy and oil platform and will continue to grow the container and trans-shipping capacities.
We are also increasing airport capacities to follow through with the open-sky agreement Morocco signed with Europe in 2006, meaning more frequent flights between Europe and Morocco and other continents.
Q: What plans do you have in terms of developing infrastructure on the ground?
A: We are speeding up the construction of motorways, so much so that by 2012, north and south Morocco will be linked. We are going to be building 200 kilometres of motorways a year. We are also making sure we open up more regions [to road travel]. We have 500 km of Mediterranean coastline, which, if opened up, offer tremendous opportunities in terms of tourism. We also want to open up rural areas through the construction of 2000 km of roads a year in those regions. The links within Morocco and those to outside Morocco are becoming much more fluid. This is very important for the competitiveness of our economy because we've been able to reduce transport lags and delays by 50%.
Q: What other investments are being made to boost international competitiveness?
A: Another investment just as important as physical resources is that in human resources - men and women. We have accelerated the pace of investment for education, increasing the budget for 2009-10 by 33% and over the next five years we plan to continue at this pace. This will support the needs of the future economy and tackle any educational deficits that still exist, particularly in rural areas.
Q: How are you developing Morocco's internal capital markets?
A: Several reforms were introduced this year for the forward markets and also there was a reorganisation of the stock exchange. The regulatory body for the market will become a regulator for the financial markets and also oversee the insurance sector. This will help create the necessary conditions to establish Casablanca as an international financial centre, for which we are seeking partners.
Q: What can a country such as Morocco learn from the recent mistakes of more developed countries in Europe and the US?
A: The liberalisation of the world economy was not accompanied by a good regulatory structure and I think this is one of the elements that led to the financial system exceeding what was bearable.
We were previously existing in what was almost a virtual economy. The world had totally lost its marker in terms of what the real economy was and there was a drift from the real economy towards the virtual one. This had a significant impact on both developed and developing economies as we started to witness increasing speculation. It was much easier to earn money rather than invest in industrial or service-based activities. I think the main lesson learnt, for me, is that a free market, while necessary, needs to be regulated. That is the path we adopted in Morocco and it enabled us not to be as affected as the more advanced economies [by the financial crisis].
Q: Finally, what is your number one priority for 2010?
A: The major challenge is to ensure there is the same level of trust between all the players in the economy that we had in 2009. This is something we achieved last year. We demonstrated that trust is extremely important in maintaining investment and employment, and we plan to carry on like this. In any moment of crisis, trust is essential if we are to emerge intact.
Morocco's inflation, average consumer prices, Annual % change
Morocco's GDP, current prices, $bn
