The Association for the Taxation of Transactions and Aid to Citizens in Morocco (ATTAC Maroc) issued a statement on December 26 concerning the costs of the most recent Precautionary and Liquidity Line (PLL) that the International Monetary Fund granted to Morocco.
The IMF’s executive board approved a PLL arrangement for Morocco on December 17 for $2.97 billion over two years.
The PLL is Morocco’s fourth arrangement with the IMF in six years which the Moroccan government considers precautionary. The IMF approved Morocco’s first PLL arrangement in August 2012 for $6.2 billion, the second PLL for $5 billion in July 2014, and the third for $3.5 billion in July 2016.
However, ATTAC Maroc, an association involved in the alter-globalization movement, has argued that Morocco has not used any of the lines but has incurred costs estimated at MAD 720 million.
ATTAC Maroc fights the neo-liberal policies of international economic institutions, such as the World Bank, the IMF, and the World Trade Organization, as well as the world’s great powers. ATTAC Maroc also calls for creditors to cancel public debt, saying public debt is one of the main tools that deepens Morocco’s structural dependence.
Introduced in 2001, the PLL aims to “help countries with sound economic fundamentals and strong records of policy implementation but with some remaining vulnerabilities” to meet their needs for liquidity more flexibly, the IMF asserts.
Only two countries have used the PLL so far: the Former Yugoslav Republic of Macedonia and Morocco.
PLL ‘shows the structural dependence’ of Morocco’s economy
IMF Deputy Managing Director Mitsuhiro Furusawa said the new PLL arrangement “will provide insurance against external shocks and support the authorities’ efforts to further strengthen the economy’s resilience and promote higher and more inclusive growth.”
In contrast, ATTAC believes that the PLL “shows the structural dependence and fragility of the Moroccan economy.”
Morocco, according to the association, “is likely to face an increase in oil price, which represents a significant part of its imports, a fall in the prices of its main exports on the international markets and more particularly in Europe (agricultural products, fisheries and mining products like phosphates), a drop in money transfers from Moroccans residing abroad, tourism receipts or foreign direct investment.”
The government expects the PLL will facilitate Morocco’s access to new loans in the international financial market. In turn, the government hopes that will increase confidence in the stability of the Moroccan economy in order to receive foreign investment and secure the country’s loan repayment.
For this reason, the line represents a foreign currency reserve that the country can use in the event of a serious deterioration of the balance of payments, according to ATTAC.
Morocco started issuing bonds in the international financial market in 2007 when it received a €500 million loan, then €1 billion euros in 2010, $1.5 billion in 2012, $750 million in 2013, and €1 billion in 2014, ATTAC noted.
The North African country plans to issue a new bond in 2019 of around €1 billion euros, according to Minister of Economy Mohamed Benchaaboun.
IMF’s conditions for PLL arrangement
The IMF’s conditions to obtain the PPL include reforming education, governance, the labor market, and taxation and improving the business climate, strengthening state-owned enterprises monitoring, and targeting social spending better.
According to ATTAC’s statement, the IMF calls for “the acceleration of ongoing structural reforms to increase ‘free trade’, dismantle the customs system, create free zones, privatize public institutions and services, expand tax incentives to multinationals and large local capital, dismantle the subsidy system, reduce the budgets for social sectors (education, health and housing), and generalize fixed-term contracts in the public service.”
At the end of 2017, Morocco had MAD 900 billion in public debt and MAD 149 billion in debt service, according to ATTAC’s statement.
Meanwhile, the association objected to the small size of the government’s education and scientific research budget in 2017 at MAD 54 billion, that of the health sector at MAD 14 billion, and of public investment at MAD 64 billion.
ATTAC stressed that the cost of the debt was “much higher than the social budgets and hinders any real social and human development.”
The deficit makes the working classes and the employees, according to ATTAC, bear the burden of debt repayment through “the policies of austerity, poverty, wage freezes, unemployment, marginalization … imposed by institutions and a Parliament that do not represent the people’s will.”
At the end of its statement, ATTAC ultimately objected to the PPL, saying it “mortgages the future of Morocco and its people by the IMF’s draconian conditionalities.” It also condemned the state’s austerity policies and structural reforms it says are imposed on the working classes and employees to “satisfy” foreign decision-making institutions.
Established in 2000, ATTAC Maroc is a member of the Committee for the Abolition of Illegitimate Debt (CADTM), the CADTM Africa Network. Since May 2014, ATTAC Maroc and CADTM Belgium have been serving as the international secretariat of the international CADTM network.