Morocco was forced to make two major "adjustments" to its economic plans for 1990. In May, the Moroccan currency, the dirham, valued at roughly eight to the US dollar, was devalued by 9.75 percent. The government also presented to the parliament a revised budget, including a 16 percent cut in investment expenditures.
Although Morocco is the world's major phosphate exporter, its phosphates were not selling well. The tourism sector also looked weak, and the trade deficit had doubled from 1988 to 1989.
On top of all this early bad news, the outbreak of the Gulf crisis confirmed that Rabat would not be able to exercise as much control as it wished to over its economy in 1990.
Low Growth, High Inflation
According to an October forecast by a Moroccan business study center, Le Centre Marocain de Conjoncture (CMC), Morocco's economic growth rate would not exceed 2.5 percent in 1990, with inflation between 6 and 8 percent. In 1989, the growth rate was 1.3 percent and inflation hit a record low of 2.3 percent.
In fact, figures released by the Moroccan Council of Business Owners (CGEM) indicate that during the first nine months of 1990, inflation already had reached 6.6 percent. Moreover, on Oct. 29, 1990, energy prices rose an average of 15 percent.
Every extra dollar on the per-barrel price of oil costs the Moroccan treasury 370 Moroccan dirhams in hard currency. Because of the Gulf crisis, in 1990 Morocco's energy bill increased more than $200 million, a figure reflected in the prices of consumer goods.
Morocco's Four Key Resources
Tourism, phosphates, agriculture and remittances from Moroccan workers overseas are Rabat's four main income resources.
Tourism. After a bad year in 1989, the sector's income was up 9 percent in the first half of 1990, compared to the same period the previous year. The improvement was short-lived, however. In early August, the Gulf crisis, coupled with the outbreak in Morocco of cholera, provoked massive cancellations from travel agents overseas. The cancellation rate rose to 70 percent by early September.
Normally, occupancy rates in hotels easily reach 95 percent during August-September. Yearly income from tourism in Morocco is about 9 billion Moroccan dirhams, a little over $1 billion.
Agriculture. Forecasts for the 1989-90 grain harvest were 6.2 million tons, against 7.3 million for the previous harvest. With its population increasing, Morocco will have to devote in 1990 and 1991 more hard currency than usual to buy food abroad. Agriculture provides more than half of Morocco's jobs, and half the country's population lives in rural areas.
The phosphates industry. This sector should fare better than in 1989, when Moroccan exports were down 12.9 percent. According to figures released by CMC, production of the Moroccan phosphates industry was up 24 to 29 percent for raw phosphates, phosphoric acid and fertilizers. During the first half of 1990, phosphates industry income was up 30.8 percent compared to the same period in 1989, from 3.09 billion to 4.05 billion Moroccan dirhams.
Remittances from overseas. Thanks to the devaluation of the Moroccan dirham, and to various banking measures to encourage hard-currency transfers from overseas, remittances grew 7.9 billion dirhams in the first half of 1990, compared to 5.5 billion dirhams in the same period of 1989.
Energy. To reduce Morocco's total dependence on energy imports, Rabat has launched an ambitious oil prospecting program in partnership with the US firm Texaco, the Canadian firm Petro-Canada, and the Italian firm AGIP. …