Underlying weakness will hold back Moroccan economy

Subject Economic outlook Significance The fall in oil prices has brought considerable benefits to Morocco's external account, as the country is heavily dependent on imported energy. However, its overall economic performance will be held back by fluctuations in agricultural output, the weakness of the European market, corruption and the deficiencies of the educational system. Impacts The current account deficit will fall below 1 billion dollars in 2016, according to the IMF, compared with almost 10 billion in 2012. Low oil prices have helped the government push through energy subsidy reforms, but pension reform will meet stiff resistance. The income from tourism and remittances will struggle to recover owing to euro-area weakness. Reform to the education system -- an essential element in boosting economic performance -- will be a thorny issue.

Instrument of Managing Exchange Market Pressure: Money Supply or Interest Rate

Exchange market pressure (emp) reflects disequilibrium in money market. The traditional approaches used to examine the disequilibrium in money market include the monetary approach to balance of payments and monetary approach to exchange rate. Under the former approach the variation in foreign reserves helps restore the equilibrium while under the latter one the change in exchange rate does the needful.1 The idea of this study stems from the fact that under the managed float exchange rate regime, changes in foreign reserves or changes in exchange rate in isolation are not a sufficient guide to characterise the external account situation of an economy. For example, exchange rate depreciation can be partially avoided or at least delayed if the central bank injects foreign currency in the forex market by letting its foreign reserves deplete. Alternatively, central bank can build up foreign reserves by purchasing foreign currency from the market against domestic currency. Such intervention would curb the exchange rate appreciation demanded by fundamentals. Therefore, focus on either of the two, that is, movement in exchange rate or variation in foreign reserves, to the complete exclusion of the other, is bound to portray a misleading picture of the external account situation. Given the foregoing a composite variable, that incorporates changes in exchange rate as well as variation in foreign reserves, over a certain period, is needed to characterise the condition of external account. The requisite composite variable has been developed by Girton and Roper (1977) as ‘simple sum of exchange rate depreciation and variation in foreign reserves scaled by monetary base’. They refer to it as exchange market pressure (emp).

External Account and Foreign Debt Management

The paper highlights strong gains in the macro area. The author also shows how total debt as a percentage of GDP has declined from 100% in 2000 to 61% in 2005. This had resulted from a debt restructuring with the Paris Club in 2001 and also due to the re-appraisal of GDP, which has lowered the debt burden as well. We should first focus on the external account, which is very topical in both newspapers and TV. The trade deficit has widened significantly. It is therefore very appropriate to understand what is the external balance. Should we worry about it widening? Should the country across our border also worry, because they are also facing a greater deficit?

The Evolution of States, Markets, and Civil Institutions in Rural Africa

Sinceindependence most sub-Saharan African countries have retrogressed from an early period of rising expectations and optimism to growing difficulties in the 1970s and early 1980s, followed by a painful era of stabilisation and structural adjustment measures. A large part of the blame for so many unfavourable developments, notably stagnating growth and untenable domestic and external account imbalances, can be attributed to the nature of the African state.