The report presents an overview offinancial sector reforms in Morocco, between 1990-1998, aperiod notable for liberalization. Reforms targeted thebanking sector, development of the capital market, andliberalization of the financial sector, with recent reformefforts focused on savings institutions (insurance andpension funds). Included were the elimination of creditceilings, interest rate liberalization, and overhaul of thelegislative framework governing lending institutions, namelythrough the adoption of the new Banking Law of 1993. As aresult, the financial sector is increasingly operating inaccordance with market rules, and, financial inter-mediationhas intensified. The financial situation of commercial banksis healthy, and has clearly improved since 1993, withforeign exchange risk exposure well below prudential limits.However, management of credit risk should improve, due tothe high percentage of non-recoverable loans. Return onequity of Moroccan banks has been satisfactorily achieved,despite weak responsiveness by bank lending, and short-termrates to market conditions. Recommendations includereduction of bank inter-mediation costs, while preservingfinancial soundness; improvement of bank prudentialregulation, and financial disclosure; increased lending andsavings competition; and, promotion of market-based interestrates, and, reform of the government securities market.
PDF
download
878987797
028-85220240
