-
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No. 76719-MA
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
PROGRAM DOCUMENT FOR A PROPOSED LOAN
IN THE AMOUNT OF EUR 78.1 MILLION (US$100.0 MILLION
EQUIVALENT)
TO
THE KINGDOM OF MOROCCO
FOR A
SECOND EDUCATION DEVELOPMENT POLICY LOAN
APRIL 29, 2013
Human Development Department Maghreb Department Middle East and
North Africa
This document has a restricted distribution and may be used by
recipients only in the performance of their official duties. Its
contents may not otherwise be disclosed without World Bank
authorization.
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MOROCCO GOVERNMENT FISCAL YEAR January 1 – December 31
CURRENCY EQUIVALENTS
(Exchange Rate Effective as of March 31, 2013) Currency Unit
Moroccan Dirham
US$1.00 = MAD8.65 EU€1.00 = US$1.28 SDR1.00 = US$1.50
WEIGHTS AND MEASURES Metric System
ABBREVIATION AND ACRONYMS
AAER School Support Association (Association d’appui à l’école
de la réussite)
AECID Spanish International Cooperation Agency for Development
(Agencia Española de Cooperación Internacional para el
Desarrollo)
AFD French Development Agency (Agence française de
développement) AfDB African Development Bank AREF Regional
Education Office (Académie régionale d’éducation et de
formation) BAM Central Bank of Morocco (Bank al-Maghrib) CNEF
National Education and Training Charter (Charte nationale de
l’éducation et de la formation 1999-2009) COBIT Control
Objectives for Information and Related Technology COSO Committee of
Sponsoring Organizations of the Tradeway Commission CPAR Country
Procurement Assessment Review CPS Country Partnership Strategy CREE
Regional Assessment and Testing Center (Centre régional de
l’évaluation et des examens) CRMEF Regional Teacher Training
Center (Centre régional des métiers de
l’éducation et de la formation) CSC Central Steering Committee
CSE Higher Council for Education (Conseil supérieur de
l’enseignement) DA Designated account DPL Development policy loan
EDPL1 First Education Development Policy Loan EDPL2 Second
Education Development Policy Loan EIA Environmental Impact
Assessment EIB European Investment Bank EU European Union EU€ Euro
FDI Foreign direct investment GDP Gross domestic product HCP
National Statistics Office (Haut Commissariat au Plan) IMF
International Monetary Fund INDH National Human Development
Initiative (Initiative nationale de
développement humain) JICA Japanese International Cooperation
Agency
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iii
MAD Moroccan dirham MDG Millennium Development Goals MEF
Ministry of Finance (Ministère de l’économie et des finances) MEN
Ministry of Education (Ministère de l’éducation nationale) MENA
Middle East and North Africa Region MTEF Medium-Term Expenditure
Framework NGO Non-governmental organization NIF Neighborhood
Investment Facility PARSEM Basic Education Reform Support Program
(Programme d’appui à la
réforme du secteur de l’éducation et de la formation) PAMT
Education Action Plan (Plan d’action à moyen terme 2013-2016) PEFA
Public Expenditure and Financial Accountability PER Public
Expenditure Review PFM Public Financial Management PIRLS Progress
in International Reading Literacy Study PJD Justice and Development
Party (Parti de la justice et du
développement) PLL Precautionary and Liquidity Line (IMF) PNEA
National Learning Assessment Program (Programme national
d’évaluation des acquis) PPD Public Procurement Decree PUEN
Education Emergency Program (Programme d’urgence de l’éducation
nationale 2009-2012) RSC Regional Steering Committee TFP
Technical and Financial Partners TIMSS Trends in International
Mathematics and Science Study UCS Use of Country Procurement
Systems in Bank-Supported Operations US$ United States dollar
Vice President: Country Director:
Sector Director: Sector Manager:
Task Team Leader:
Inger Andersen Simon Gray Steen Lau Jorgensen Mourad Ezzine
Jeffrey Waite
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iv
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
PROGRAM DOCUMENT FOR A PROPOSED
SECOND EDUCATION DEVELOPMENT POLICY LOAN
TO THE KINGDOM OF MOROCCO
TABLE OF CONTENTS
LOAN AND PROGRAM SUMMARY
.........................................................................................................
vi I. INTRODUCTION
............................................................................................................................
1 II. COUNTRY CONTEXT
...................................................................................................................
3
II.A. Recent economic developments
...............................................................................
3 II.B. Macroeconomic outlook and debt sustainability
...................................................... 5
III. THE GOVERNMENT’S PROGRAM AND PARTICIPATORY PROCESSES
....................... 9 III.A. Education sector background and
key issues
.......................................................... 9 III.B.
Government program
..............................................................................................
15 III.C. Implementation
costs...............................................................................................
17 III.D. Participatory process
...............................................................................................
18
IV. BANK SUPPORT TO THE GOVERNMENT’S STRATEGY
.................................................... 19 IV.A. Link
to the Country Partnership Strategy
............................................................... 19
IV.B. Collaboration with the International Monetary Fund and other
donors .................. 19 IV.C. Relationship to other Bank
operations
....................................................................
21 IV.D. Lessons learned
.......................................................................................................
22 IV.E. Analytical underpinnings
........................................................................................
24
V. THE PROPOSED EDUCATION DEVELOPMENT POLICY PROGRAM
............................. 25 V.A. Operation description
...............................................................................................
25 V.B. Policy areas
..............................................................................................................
27
VI. OPERATION IMPLEMENTATION
.............................................................................................
32 VI.A. Poverty and social impact
.......................................................................................
32 VI.B. Gender and inclusion
..............................................................................................
33 VI.C. Environmental aspects
............................................................................................
33 VI.D. Implementation, monitoring and evaluation
........................................................... 33
VI.E. Fiduciary aspects
.....................................................................................................
35 VI.F. Risks and risk mitigation
.........................................................................................
37
ANNEXES
ANNEX 1: LETTER OF DEVELOPMENT POLICY
................................................................................
39 ANNEX 2: SECOND EDUCATION DEVELOPMENT POLICY LOAN POLICY MATRIX
.............. 58 ANNEX 3: GOVERNMENT’S EDUCATION EMERGENCY PROGRAM
(PUEN) PROGRESS
INDICATORS
..............................................................................................................................................
64 ANNEX 4: FUND RELATIONS NOTE
.......................................................................................................
69 ANNEX 5.1: MACROECONOMIC DEVELOPMENTS OVER THE LAST DECADE
........................ 73 ANNEX 5.2: PUBLIC DEBT SUSTAINABILITY
AND EXTERNAL FINANCING REQUIREMENTS
..............................................................................................................................................
76 ANNEX 5.3: COUNTRY AT A GLANCE
...................................................................................................
79
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v
The proposed loan was prepared by a World Bank team consisting
of Jeffrey Waite (Task Team Leader and Lead Education Specialist),
Nadine Poupart (Senior Economist), Khalid El Messnaoui (Senior
Economist), Abdul-Wahab Seyni (Senior Social Development
Specialist), Alaa Ahmed Sarhan (Senior Environmental Specialist),
Jean-Charles de Daruvar (Senior Counsel), Abdoulaye Keita (Senior
Procurement Specialist), Lamyae Hanafi Benzakour (Financial
Management Specialist), Hassine Hedda (Finance Officer), Christina
Wright (Operations Officer), Fatiha Bouamoud (Program Assistant)
and Emma Etori (Program Assistant). The team worked under the
guidance of Mourad Ezzine (Sector Manager Education) and Simon Gray
(Country Director Maghreb). The team benefitted from interactions
with colleagues from the African Development Bank, the European
Commission, the European Investment Bank, the French Development
Agency, the Japanese International Cooperation Agency and the
Spanish International Cooperation Agency for Development. Finally,
the team is greatly indebted to many officials of the Government of
Morocco, with especial thanks due to the Ministry of Education, the
Ministry of Economy and Finance and the Ministry of General Affairs
and Governance.
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vi
LOAN AND PROGRAM SUMMARY
KINGDOM OF MOROCCO
SECOND EDUCATION DEVELOPMENT POLICY LOAN
Borrower Kingdom of Morocco
Implementing Agency Ministry of Education
Financing Data IBRD Variable-Spread Loan with 29 years maturity,
including a 7-year grace period in an amount of EU€ 78.1 million
(US$100.0 million equivalent)
Operation Type
Single-tranche stand-alone Development Policy Loan
Main Policy Areas
• Achieve universal basic education • Improve system performance
(teaching, management and
stewardship) • Mobilize and utilize resources
Key Outcome Indicators
• Ratio of new rural schools to new urban schools planned in the
previous year
• Number of new social support methodologies developed
(cumulative)
• Number of Regional Assessment and Testing Centers established
• Proportion of Regional Assessment and Testing Centers
producing an annual report during the previous year on its
assessment and testing activities
• Number of students enrolled in Regional Teacher Training
Centers
• Number of Regional Teacher Training Center graduates assigned
to teaching positions
• Ratio of the urban female-male teacher ratio to the rural
female-male teacher ratio (primary and lower secondary)
• Ratio of the urban student-teacher ratio to the rural
student-teacher ratio (primary and lower secondary)
• Proportion of resource management decisions taken by AREFs •
Revised guidelines for school charter development and funding
use, based on recommendations of the evaluation of school
charter implementation, sent to all schools
• Proportion of regional internal audit units producing an
annual report during the previous year
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vii
Program Development Objective and Contribution to Country
Partnership Strategy
The proposed program aims to strengthen the schools sector’s
institutional arrangements in the short term, in ways that in the
medium term will: (i) increase access to school education,
especially for rural girls and boys at the lower secondary level;
(ii) improve the quality of teaching and learning in primary and
lower secondary education; and (iii) enhance efficiency in
decentralized governance of the schools sector. The proposed
program would contribute to the Country Partnership Strategy’s
second pillar – improving the quality of service delivery to
citizens – by improving equity, access and quality of education
service delivery.
Risks and Risk Mitigation
• Implementation of key and sensitive reforms may not be
continued under the PAMT 2013-2016. The Bank team will continue to
engage the Government in a close dialogue on these reforms, and to
support decision making through technical assistance when important
technical issues arise.
• The reform program faces resistance from unions, including
teacher resistance to the efficiency measures and the move
toward greater accountability. The Government will continue to
engage in a broad dialogue with teacher unions and teachers, with a
view to creating a buy-in to the reform program through
participation and decision-making.
• Attainment of the ambitious objectives of the Government’s
program may be constrained unless sufficient resources are made
available. Education has been a national priority for successive
government and this level of political commitment is expected to
continue.
• Implementation of the governmental program may be constrained
by the capacity of decentralized agencies. The MEN is making
considerable efforts to strengthen the capacity of its management
systems.
Operation ID P120541
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1
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
PROGRAM DOCUMENT FOR A PROPOSED
SECOND EDUCATION DEVELOPMENT POLICY LOAN
TO THE KINGDOM OF MOROCCO
I. INTRODUCTION 1. The wave of democratization that the Middle
East and North Africa (MENA) region has experienced since the start
of the Arab Spring has also reached Morocco, although its
experience has been a reasonably peaceful one with social
demonstrations taking place regularly across the country during
2011 and only sporadic outbursts of violence noted. This social
movement started with calls for political change, a curbing of
corruption and a more inclusive development process. In March 2011,
the King of Morocco proposed a broad and comprehensive package of
political reforms that were approved in a constitutional referendum
held on July 1, 2011.1 The new constitution sets the basis for a
more open and democratic society, provides mechanisms for the
construction of a modern state of law and institutions, and lays
the foundation for extended regionalization. Transparent elections,
held on November 25, 2011, were won by the Parti de la justice et
du développement (PJD), a party that had traditionally been in
active opposition and has seen its support increasing steadily in
recent years. The PJD won 27 percent of the vote, almost twice the
score of the second largest political party. An intense period of
discussions among political parties then followed, leading to the
formation, in early January 2012, of a four-party coalition
Government, with the head of the PJD becoming the Head of
Government. 2. In this context, Morocco’s unique experience
reflects its political distinctiveness in the region, even though
many of the same grievances among the population exist (lack of
economic opportunities, corruption, widespread poverty, social
inequality, unemployment). This experience has shown that Moroccans
seem more inclined to seek evolution within the system – gradual
change continuous with the country’s history and religious values.
Morocco’s management of its own protest movement seemed well
managed and the external world highlighted Morocco’s particular
situation. The PJD election showed that, even in a constrained
setting, the population was seeking real and sustainable change
while working within the system. The protests, which continue to
this day, keep the pressure on the Government to follow through on
the promises and expectations expressed over the past year. The
King remains popular among the general public and is widely
believed to act as the guarantor of political stability and social
cohesion. 3. These changes have followed on the heels of other
reforms already undertaken since the current King came to power.
Successive national governments have overseen an impressive
political, economic and social transformation, with a marked
acceleration of structural reforms in recent years. Sound
macroeconomic management has produced solid foundations, and the
country was on a recovery path from the stagnation of the 1990s
when a series of adverse external shocks hit the economy, starting
with the 2008 financial crisis. However, as shown, none of these
factors provided total immunity to the rising tide of
dissatisfaction and to the pressure from the outstanding
development issues and challenges. The transition has shown the
powerful consequences of exclusion and high levels of youth
unemployment in the MENA region. Jobs are at the forefront of
attention and unemployment
1 The vote in favor of the proposed reforms was 98.5 percent
with a participation rate of 73 percent.
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2
is the main political and economic issue facing the Government.
Despite a relatively favorable socio-political situation compared
to some other MENA countries, Morocco still has a lot to do to
address inequality and poverty, and its social indicators remain
relatively low in comparison with other countries in the region. 4.
The movements associated with the political transition and
constitutional changes represent real pressure on the Moroccan
State for meaningful and quick change. While the people seem to be
willing to support the Government and its mandate, they are
expecting and indeed demanding that it break with the past and
usher in more credible and faster reforms, notably in the areas of
job creation and improvement of the quality of public services
delivered. Morocco is thus on the threshold of potentially profound
social, political and economic transformation. If the Government
can assume more ownership of the political process and genuinely
deliver, then this will go a long way to transforming the social
and political landscape of Morocco. 5. Investing in human capital
through quality education is a priority in Morocco’s current
development process. The low level of education and skills of the
workforce is among the main factors which constrain the country’s
economic growth and long-term prosperity. The labor market is
imbalanced, with notable mismatches between job demands and
graduation qualifications and skills. Improving the quality of
outcomes in the education and training sector has become a key
focus of governmental actions. To overcome the challenges faced by
the education sector, previous governments embarked on a
comprehensive reform of the education and training system,
beginning with the 1999 National Education and Training Charter
(CNEF).2 The CNEF, which enjoyed strong national consensus,
declared 2000-2009 the “education and training decade”, thereby
establishing education and training as a national priority. In line
with royal instructions, an ambitious Education Emergency Program
2009-2012 (PUEN)3 was drawn up to build on this decade-long reform
process. The Government, appointed just over a year ago, is now
preparing its Education Action Plan 2013-2016 (PAMT), and is
drawing lessons from the implementation of the previous action
plans. 6. The proposed operation closes out a cycle of two
development policy loans (DPL) that have supported the Government’s
PUEN through the period 2009-2012. In 2007, the Government of the
day asked five major donors (European Union [EU], European
Investment Bank [EIB], French Development Agency [AFD], African
Development Bank [AfDB] and World Bank) to assist the
implementation of the PUEN reform agenda through the progressive
application of the Paris Declaration on Aid Effectiveness. The
World Bank developed the two DPLs to support the refinement and
implementation of the PUEN reform agenda, in close collaboration
with the other donors mentioned above. 7. The Bank has had a long
and active dialogue with the Government in the education sector. A
Basic Education Reform Support Project (PARSEM)–a sector-wide
approach operation–supported the implementation of program reforms
during the second half of the CNEF implementation period, closing
in June 2009.
2 http://www.men.gov.ma/sites/fr/Lists/Pages/charte.aspx 3
http://www.men.gov.ma/sites/fr/PU-space/default.aspx;
http://www.men.gov.ma/sites/fr/PU-space/bib_doc/portefeuille_fr.pdf;
http://www.men.gov.ma/sites/fr/PU-space/bib_doc/SYNTHESE_Fr.pdf;
http://www.men.gov.ma/sites/fr/PU-space/bib_doc/RESUME_Fr.pdf
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3
8. Through 2008 and 2009, joint technical and preparation
missions were carried out by the five donors, known as the
Technical and Financial Partners (TFP) Group. In the course of
these missions, the TFP Group engaged in an active and coordinated
dialogue with the Government on the new strategic framework. More
specifically, the TFP Group and the Government discussed the
various actions proposed to remedy the structural problems that
were contributing to low education performance, especially at the
basic and secondary education levels. This ongoing dialogue led to
the joint identification of priority reform areas and the
definition of main results/outcome indicators, along with
monitoring and evaluation arrangements. Through 2010, 2011 and
2012, six-monthly joint missions were carried out by the TFP Group
(which now also includes the Spanish International Cooperation
Agency for Development [AECID] and the Japanese International
Cooperation Agency [JICA]) to monitor progress in PUEN
implementation. II. COUNTRY CONTEXT II.A. Recent economic
developments
9. Since 2008, Morocco has been hit by a series of exogenous
shocks. Like other emerging countries, Morocco has suffered from
the 2008 global financial crisis, though the limited financial
integration of Morocco into global financial markets has contained
the direct contagion effects. More serious were the effects of the
subsequent food and fuel crises. With the price of Brent crude oil
averaging more than US$110 per barrel in 2011-2012 and no domestic
oil production, Morocco has been confronted with a major
deterioration of its terms of trade. This deterioration was
compounded by a significant increase in its food import bill in
2012 as a result of a severe domestic drought at a time of soaring
international food prices, especially of wheat. Finally, with a
strong trade exposure to the EU, Morocco has been adversely
affected by developments in the euro area, in particular the
sovereign debt crises in Spain, Italy and other peripheral
countries and subsequent slowing down of economic growth. 10. These
internal and external shocks combined with significant economic
rigidities have exposed the fragility of the Moroccan economy in
2012. Gross domestic product (GDP) is estimated to have grown at a
positive but modest 2.7 percent, compared to 3.4 percent expected
in the 2012 Budget Law. This lackluster performance reflected the
continued vulnerability of the agriculture sector (which declined
by 9.8 percent) to erratic rainfalls. The non-agricultural sector
grew at a healthier rate of 4.6 percent; however mostly driven by
debt-creating domestic demand. Public consumption increased by 5
percent and household consumption by 4.8 percent, the latter
benefiting from wage rises and relatively low prices of non-food
products. Investment increased at the more moderate rate of 2.7
percent, mostly driven by programs of social housing, public works,
and industrial equipment. 11. The Government and the Central Bank
(BAM) continued to demonstrate their commitment to control
inflation. Notwithstanding higher world prices of imported
commodities, inflation has been kept low thanks to price subsidies
benefiting basic food and fuel products. As a result of the
Government’s price controls, the average consumer price index edged
up to only 1.3 percent in 2012 as compared to 0.9 percent in 2011.
Among all sectors, food sector prices contributed the most to
inflation in 2012 (up 2.2 percent). The upward adjustment of the
administered prices for fuel products in June 2012 and related
direct increase in transportation prices (by 3.2 percent) has had
limited indirect effect on overall inflation.
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4
12. Morocco’s unemployment rate has been stubbornly high at
around 9 percent—or about one million people—despite years of
respectable economic growth and declining participation rates. Less
than half of the Moroccan population is actually active (i.e.,
either employed or looking for a job), which is one of the lowest
participation rates among emerging economies. Participation rates
have been steadily declining from 55.3 percent in 1999 to 48.4
percent in 2012. Regarding the profile of the job seekers, four out
of five unemployed are urban jobless, two-thirds are youth aged
15-29, a quarter of jobless people hold a university diploma, half
of the unemployed are looking for their first jobs, and more than
two-thirds have been jobless for more than one year. 13. The
gradual pace of public finance reforms coupled with the economic
turmoil in Europe and continued high prices of commodities have
eventually had their toll on Morocco’s fiscal balance. Data
released by the Moroccan authorities in early February 2013
indicate that the worsening of public finance in 2012 had been more
pronounced than expected.4 According to the Ministry of Economy and
Finance (MEF), the budget deficit widened to 7.6 percent of GDP,
which compares to a deficit of 5.5 percent of GDP envisaged in the
2012 Budget Law.5 The deficit would have been even higher without
the decision of the Government to increase the prices of liquid
fuel products in June 2012 (up 19.6 percent for gasoline, 14
percent for gasoil, and 13.4 percent for industrial fuel), which
helped reduce the deficit by 0.6 percentage point of GDP. 14. The
current universal and open subsidy system and higher wage bill are
increasingly testing Morocco’s record of fiscal prudence. Despite
the good performance of tax collection in 2012 (up 6.1 percent),
government revenues could not compensate for the increase in
current expenditures (up 11 percent), mostly due to higher
subsidies and a larger public wage bill. The combined cost of the
subsidy system and the Government wage bill (at 6.6 percent of GDP
and 11.5 percent of GDP, respectively) represented more than 53.0
percent of total expenditures in 2012. Their increases contributed
to more than 63.5 percent of the total increase in current
expenditures in 2012. Table 1. Annual subsidies in percent of
GDP
Commodities 2007 2008 2009 2010 2011 2012
Food 0.8 1.1 0.7 0.7 1.0 1.1
Fuels 1.7 3.5 1.1 2.9 5.1 5.5
Total Subsidies 2.5 4.6 1.7 3.6 6.1 6.6
Source: MEF and, for 2012, World Bank staff estimates
15. Even though the fiscal deficit has been mostly financed on
the domestic market, there have been no apparent signs of private
sector crowding out—thanks to the relaxation of monetary policy by
the BAM (see below). The Treasury issued the equivalent of 6
percent of GDP in domestic bonds and sold part of its capital in
the Banque populaire for an additional 0.4 percent of GDP. To fill
the financing gap, the Government raised US$1.5 billion bonds on
international financial markets in December 2012. As a result, the
Treasury debt increased by 5.1 percentage points of GDP in 2012 to
reach 58.8 percent of GDP. While the Treasury is
4 For overall consistency of indicators, all ratios to GDP have
been calculated using the estimated nominal GDP released by the HCP
in February 2013 instead of the projected GDP envisaged in the
Budget Law 2012. 5 The budget deficit does not take into account
privatization receipts.
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5
mostly indebted in its own currency (with only a debt of about
14 percent of GDP denominated in foreign exchange), the level and
pace of deterioration of the debt are worrisome. In just four
years, Morocco’s Treasury debt increased by 11.5 percentage points
of GDP. Clearly, without corrective measures, Morocco’s current
fiscal stance risks impacting the sustainability of Morocco’s
overall macroeconomic framework in the medium term. 16. The
weakening fiscal situation has also put the balance of payments
under stress. The trade deficit continued to deteriorate in 2012
due to sluggish external demand, notably from Europe, and increased
value of imports due to strong domestic demand and higher world
prices of imported commodities. Total nominal imports increased by
6.7 percent, while exports grew by 4.7 percent. Tourism receipts
declined by 1.5 percent and workers’ remittances dropped by 3.9
percent. The current account deficit is therefore estimated to have
widened to 9.6 percent of GDP in 2012.6 On the capital account
side, net foreign direct investment (FDI) inflows grew by a healthy
17.6 percent during the period, thanks to foreign investors’
continued confidence in the Moroccan economy. However, total net
external capital flows were not sufficient to finance the current
account deficit, and net official international reserves declined
by US$3.1 billion to reach the critical level of US$16.3 billion by
end 2012, corresponding to 3.9 months of imports coverage. 17. To
stimulate economic activity and help finance the economy—in a
context of price controls and low inflation expectations—the BAM
decided to reduce its policy rate from 3.25 percent to 3 percent in
March 2012 and to lower the money reserve requirement for banks
from 6 to 4 percent in September 2012. These decisions, together
with higher weekly liquidity injections by the BAM into the
domestic banking system, had the effect of relaxing the liquidity
constraints in the money market and helped finance the economy. As
a result, money supply increased by 5.2 percent by end 2012 after
an increase of 6.5 percent in 2011. Credit to the economy increased
by 5.7 percent (compared to 10.3 percent in 2011), mostly driven by
credit to corporate treasuries (up 7.8 percent). The latter was in
part the result of liquidity needs of businesses to compensate for
large arrears overdue by the public sector. Credit to housing also
increased substantially (up 6.1 percent) with the extension of the
social housing programs backed by the Government. With increased
access to credit and the relatively low prices of housing
equipment, consumption credit jumped by 9.8 percent in 2012. At the
same time, credit to business equipment dropped by 2 percent.
Non-performing loans remained at an average 4.3 percent of total
credit to the private sector, slightly declining over the fourth
quarter of 2012. II.B. Macroeconomic outlook and debt
sustainability
18. Morocco’s macroeconomic room for maneuvering has narrowed
considerably. The twin deficits that have accumulated to finance
the series of adverse external shocks since 2008 have largely
exhausted the room for maneuver that Morocco had built prior to
these crises through prudent macroeconomic policies and management.
They unveiled two main weaknesses that are endangering Morocco’s
external and fiscal sustainability in case of a further
deterioration of its external or domestic environment. First, the
slow structural transformation of the economy hinders the prospects
of a rapid increase in competitiveness, exports, and quality job
generation. Second is the pursuit of highly onerous fiscal
policies,
6 Bank staff estimates.
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6
such as the universal subsidy system and tax exoneration
programs. These two weaknesses are contributing to the reversal of
the downward trend of public debt and the depletion of foreign
reserves to critical levels.
19. Macroeconomic prospects in the medium term will greatly
depend on the scope, depth and pace of Morocco’s reform programs as
well as developments in Europe – the main trading partner of
Morocco. Morocco is expected to benefit from ongoing reforms to
improve the economy’s overall competitiveness and the effectiveness
of sectoral policies. The current reforms to strengthen governance
and justice, consolidate public finance, and deepen
decentralization are critical to achieving long-lasting improvement
in economic efficiency, productivity, and employment. Under these
assumptions, economic growth should recover to around 5 percent by
2015. Inflation is projected to remain under control at 2.5 percent
or below. Main macroeconomic indicators are presented in Table 2
below.
Table 2. Base-line Medium Term Macroeconomic Indicators
Est. Projections 2010 2011 2012 2013 2014 2015 2016 2017 Part A:
Main Macro Aggregates
Real annual growth rates GDP at market prices 3.6 5.0 2.7 4.5
4.7 5.0 5.5 5.7
Non-Agricultural GDP 4.5 4.9 4.6 4.2 5.2 5.5 6.0 6.1 GDP per
capita 2.6 3.9 1.7 3.5 3.7 4.0 4.6 4.8 Total consumption 1.5 6.8
4.8 4.0 3.4 4.4 5.2 5.5 Gross domestic investment (GDI) -1.6 3.3
2.4 1.9 3.8 4.9 5.0 5.1 Exports (GNFS) 16.6 2.1 0.8 8.0 8.9 7.4 7.4
7.4 Imports (GNFS) 3.6 5.0 1.6 4.3 5.0 5.7 6.2 6.4
Nominal GDP growth 6.7 5.0 4.0 7.1 7.2 7.4 8.0 7.8
Savings-investment balance, as percentage of GDP
Gross domestic investment 35.0 36.0 34.5 33.9 33.9 33.9 33.7
33.5 of which Government investment 5.8 5.9 5.5 5.7 5.8 5.8 5.8
5.8
Foreign savings 4.5 7.9 9.6 8.4 7.1 6.0 5.6 5.2 Gross national
savings 30.5 28.1 24.9 25.5 26.9 27.9 28.2 28.3
Government savings (Privatization receipts excl.) 1.8 -1.0 -2.6
0.3 1.3 1.9 2.6 2.8 Non-Government savings 28.8 29.1 27.6 25.2 25.6
26.1 25.6 25.5
Gross domestic savings 28.0 25.0 22.6 20.4 21.8 23.0 23.4 23.8
Prices and money
CPI 0.9 0.9 1.3 2.4 2.4 2.3 2.3 2.0 Annual average exchange rate
(LCU/US$) 8.4 8.1 8.1 8.9 9.3 9.3 9.4 9.4 Money growth 4.8 6.5 5.2
7.0 7.8 8.5 9.1 8.8
Part B: Government Finance Indicators Percentage of GDP
Total revenues (excl. privatization) 25.4 25.9 26.1 26.4 26.7
26.8 26.8 26.8 of which Tax revenues 23.2 23.4 23.9 24.1 24.3 24.4
24.4 24.4
Total expenditures (incl CST) 29.9 33.1 34.3 32.3 31.5 30.8 30.1
29.9 of which wages and salaries 10.3 11.1 11.5 11.2 10.8 10.6 10.4
10.4 of which subsidies 3.6 6.1 6.6 4.5 4.1 3.7 3.4 3.1
Deficit (-)/Surplus (+) (commit. Basis) -4.7 -6.9 -7.6 -5.6 -4.6
-3.8 -3.1 -2.9 Other
Total Debt of Central Government/GDP 50.3 53.7 58.8 59.4 59.0
57.8 55.8 53.9 Total interest payments/Tax revenues 9.9 9.7 10.0
10.6 10.2 9.6 9.1 8.4
Part C: Balance of Payments indicators Exports of G&S (US$,
mln) 30,308 35,582 34,567 37,365 41,273 45,075 49,058 53,375
Imports of G&S (US$, mln) 40,192 49,482 48,713 50,866 53,784
57,064 61,243 65,824 Remittances (US$), change in % 3.5 12.8 -9.9
5.0 5.0 5.0 5.0 5.0 Current Account balance (in % of GDP) -4.5 -7.9
-9.6 -8.4 -7.1 -6.0 -5.6 -5.2 Net reserves (CB) in months of MGNFS
6.7 5.0 3.9 3.9 3.9 3.9 3.9 3.9
Source: Government of Morocco until 2011 and World Bank staff
estimates after
20. Should the underlying sources of growth be slow to
materialize, growth prospects would have to be adjusted downward. A
potential deterioration of the world economy,
-
7
particularly in Europe, would negatively impact the medium-term
macroeconomic outlook through reduced prospects on exports,
including tourism, as well as on workers’ remittances and FDI
flows. Similarly, sustained high commodity prices, a deterioration
of the regional context and prolonged global financial
uncertainties would have an adverse impact on Morocco’s prospects.
Moreover, there is a potential risk that even pre-crisis growth
levels might not be sustainable over the medium term if internal
demand remains the key driver of growth. 21. In line with the new
constitutional requirement, the Government has further committed to
fiscal stability and to progressively decrease the budget deficit
to the medium-term target of about 3 percent of GDP by 2016 through
the implementation of a set of critical reforms. The key measures
include: (i) reforming the universal subsidy system; (ii)
implementing civil service reform, notably by introducing a ceiling
on wage expenditures and a new remuneration system; (iii)
accelerating the fiscal and pension reform agenda; and (iv)
enhancing the efficiency of public as well as private
investments.
22. The Government’s debt strategy is to diversify financing
sources and take on a greater proportion of external financing
(Table 3). In this context, new external financing schemes are
being put in place beyond the classical multilateral and bilateral
sources of financing. The government signed in February 2013 a
grant agreement of US$1.25 billion over a five year period with the
Kuwait Development Fund to support economic and social projects. In
addition, the government signed in March 2013 a first installment
of US$400 million grant of a total of US$ 1.25 billion committed by
the Saudi Development Fund. Both grants are part of a broader
cooperation agreement signed with the Gulf Cooperation Council
countries last year committing US$5 billion over a five-year
period. In August 2012, Morocco also benefited from a Precautionary
and Liquidity Line (PLL) of US$6.2 billion approved by the
International Monetary Fund (IMF). The PLL is part of the proactive
approach of the Government to ensure new precautionary lines of
credit to be able to cope in the event of a severe deterioration of
external balances that could erupt for instance as a result of a
worsening of the economic situation in Europe. Table 3. Financing
Requirements of the Central Government (in percent of GDP)
Est. Projections
2012 2013 2014 2015 2016 2017
Financing required 19.4 18.4 17.2 15.7 14.9 13.9 Budget deficit
(+) 7.6 5.6 4.6 3.8 3.1 2.9 Amortization 11.8 12.8 12.6 11.9 11.8
11.0
Domestic 10.5 11.6 11.3 10.6 10.3 9.6 External 1.3 1.2 1.3 1.3
1.5 1.5
Total Financing available 19.4 18.4 17.2 15.7 14.9 13.9 Domestic
financing 15.3 13.2 12.9 11.7 11.4 10.6 External disbursement 3.0
3.8 3.1 2.9 2.4 2.3 Others (Privatization, grants,…) 1.1 1.4 1.2
1.1 1.1 1.0
Source: MEF and World Bank staff estimates
23. Despite its deterioration in 2012, the external position is
expected to remain sustainable over the medium term provided that
key critical reforms under implementation take hold. As noted
earlier, the current account deficit deteriorated in 2012 and is
expected to progressively edge downward to around 5.2 percent of
GDP in 2017 benefiting from improved export potentials and a
recovery of tourism activities and workers’ remittances. This
scenario critically assumes that Morocco would benefit from its
continued reform efforts
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8
in trade and competitiveness, supported among others by the
World Bank. These reforms, along with sector strategies already
under implementation, would translate into higher productive
private investments, including FDIs, and progressive gains in
competitiveness of its exports, including tourism. In this context,
external debt is expected to follow an inverted U-path reaching a
maximum at almost 40 percent of GDP in 2015 before steadily
dropping thereafter, while net foreign reserves will remain at
around four months of imports. 24. Balance of payments financing
requirements constitute a moderate concern in the medium term,
given the country’s relatively low outstanding external debt, the
financial support from the Gulf States, and still adequate foreign
reserves. As the current account deficits are projected to steadily
improve in the medium term, financing large share of them through
traditional multilateral and bilateral credit lines along with
other private capital flows, including FDIs, should not be a major
constraint. In addition, the Gulf Cooperation Council countries
recently confirmed their intention to invest US$5 billion over the
next five years, mostly in the form of grant. Any remaining
financing gap could be filled by tapping international financial
markets. The PLL from the IMF will continue to provide a potential
precautionary line of credit over the period 2013-2014.
25. The authorities are considering a possible move to a more
formal inflation targeting system in conjunction with a more
flexible exchange rate. The BAM has developed the necessary
prerequisites and tools to shift to an inflation targeting
framework. However, the timing of this reform should be carefully
considered as it requires measures to ensure fiscal sustainability,
especially with regards to reforming the subsidy system so as to
prevent a negative impact on financial stability. The current
exchange rate regime has contributed to macroeconomic stability,
yet given the rigidities of the economy, the recent trends in the
current account balance would suggest that it could possibly be
undermining international competitiveness. In the future, a more
flexible exchange rate policy would help strengthen structural
reforms to foster competitiveness and weather external shocks.
26. A comprehensive public debt sustainability analysis
indicates that the fiscal framework remains sustainable although it
would weaken under some medium term downside risks (see Annex 5.1).
Indeed, when the debt sustainability analysis was run under the
assumption of “no-policy-change” scenario, the debt stock increased
steadily over the period 2013-2018. All the six bound tests proved
sustainable over the medium term, although debt of three of the
tests remained high within the range of 58-60 percent of GDP, which
indicates that debt sustainability remains fragile to further
deterioration in Morocco’s internal or external business
environment.
27. In sum, Morocco is facing growing economic and fiscal
challenges. Assuming that the ongoing key fiscal and structural
reforms, including those envisaged in the 2013 Budget Law and
described above, are implemented in a timely fashion, Morocco’s
macroeconomic framework would remain adequate and sustainable in
the medium term. The projected macroeconomic outlook and the
success of the structural reforms depend on a robust fiscal
consolidation, a prudent monetary policy, and more flexible
exchange rate policy over the medium term that supports external
competitiveness. In particular, it is of utmost urgency that the
government starts implementing the reform of the subsidy system to
ensure the sustainability and efficiency of public finance. Until
now, the adverse effects of the global environment on Morocco have
been weathered relatively well, thanks to strong economic
fundamentals and sound macroeconomic policies carried out over the
last decade. Yet, in
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9
contrast to when the international crisis struck in 2008, the
Government today has much smaller margins for maneuver. Its
commitment to deepen and expand the current reform efforts is key
to the prospects for a sustainable recovery of investment, growth,
and employment in the years to come.
III. THE GOVERNMENT’S PROGRAM AND PARTICIPATORY PROCESSES III.A.
Education sector background and key issues
III.A.1 Access to, and completion of, schooling 28.
Implementation of the CNEF and the PUEN resulted in impressive
progress in terms of access to education. Efforts to increase the
availability of educational services have led to expanded
participation in education at all levels. From 1990/91 to 2012/13,
national net enrollment rates increased from 52.4 percent to 98.2
percent for primary education, from 17.5 percent to 56.7 percent in
lower secondary education and from 6.1 percent to 32.4 percent in
upper secondary education.7 The increased enrollment in compulsory
education has placed pressure on higher levels of education,
leading to substantial increases in student enrollments in upper
secondary schools, universities and other tertiary education
institutions.
29. Progress has been made in ensuring equitable access to
education for young children. While the gap between urban boys and
rural girls at the primary education level narrowed to just 3.5
percentage points by 2012/13, the gap at higher levels of the
education system remains large, with 53 percentage points still
separating urban boys and rural girls at the lower secondary
education level in 2012/13 (Figure 1).
Figure 1: Net enrollment rates for primary (left) and lower
secondary (right), 2005/06 – 2012/13 (%)
Source: MEN
30. Education completion rates have improved, but, at the
current pace, the Millennium Development Goal (MDG) universal
primary school completion target is unlikely to be achieved by
2015. The primary school completion rate (Grades 1-6) has increased
from 68.6 percent in 2005/06 to 90.0 percent in 2012/13. More than
two-thirds of students complete the full two cycles of basic
education (Grades 1-9). At both levels, girls’ and boys’ completion
rates are now almost identical (Table 4).
7 Source: MEN.
-
10
Table 4: Completion rates, 2005/06 – 2011/12 (%) Grades 1-6
2005/
06
2006/
07
2007/
08
2008/
09
2009/
10
2010/
11
2011/
12
2011/
12
Total 68.6 70.8 72.5 75.8 82.5 86.5 86.2 90.0 Female-Male Ratio
n.a. n.a. 104.2 104.0 103.0 101.1 100.2 99.2 Grades 1-9 2005/
06
2006/
07
2007/
08
2008/
09
2009/
10
2010/
11
2011/
12
2011/
12
Total n.a. n.a. 48.0 51.8 57.0 64.6 65.3 70.5 Female-Male Ratio
n.a. n.a. 115.6 112.5 112.0 103.6 101.2 97.9 Source: MEN III.A.2.
Schooling outcomes 31. To its credit, Morocco has been able to
maintain a constant, albeit low, level of education quality all the
while increasing school education coverage (at a particularly rapid
rate in primary education). Figure 2 shows the percentages of
students from Morocco and other MENA countries attaining each
international benchmark for Grade 4 mathematics across the last
three editions (2003, 2007 and 2011) of the international Trends in
Mathematics and Science Study (TIMSS), compared with two
better-performing countries (Hungary and Turkey) and the
international median. The 2011 editions of TIMSS and the Progress
in International Reading Literacy Study (PIRLS) showed low learning
achievement scores for Moroccan Grade 4 and Grade 8 students
compared to those from other participating countries. With the
exception of Dubai UAE (for the Grade 8 tests in mathematics and
science), no Arab state achieved above the international medians;
among the participating Arab states, Morocco and Yemen produced the
weakest scores. In Grade 4 mathematics, for example, 74 percent of
Moroccan students did not reach even the lowest of four benchmark
levels,8 while none at all reached the highest benchmark level;
this compares with the international median of 10 percent not
reaching even the lowest benchmark and 4 percent reaching the
highest benchmark. In Grade 4 reading, 79 percent of Moroccan
students did not reach the lowest benchmark, and once again none
reached the highest benchmark; the international median scores 8
percent and 5 percent for these two benchmark levels
respectively.
8 In response to the following TIMSS Grade 4 mathematics
question involving the addition of two three-place whole numbers
based on the reading of situation text – “There are 218 passengers
and 191 crew members on a ship. How many people are on the ship
altogether?” – only 35% of Moroccan students answered
correctly.
-
11
Figure 2: TIMSS 2003, 2007 & 2011 Mathematics (Grade 4)
Scores: proportion by benchmark level, in selected countries
Source: IEA & Boston College 32. Learning achievement is
uneven within the country. The first National Learning Assessment
Program (PNEA), carried out jointly in 2008 by the CSE and the
Ministry of Education (MEN), points to small gender gaps in
mathematics and science, but large gender gaps in favor of girls in
Arabic and French (Table 5). In addition, there are considerable
differences between urban and rural areas and between public and
private schools (even when the comparison is between urban public
and private settings). Unfortunately, the second PNEA, originally
scheduled for 2011, has been postponed until 2013 as a result of
ongoing teacher strikes.
-100
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12
Table 5: Average scores9 in mathematics and Arabic (%), by
grade, in 2008 Mathematics Grade 4 Grade 6 Grade 8 Grade 9 Male 34
43 26 29 Female 35 45 25 28 Urban 38 48 26 31 Rural 31 39 22 22
Public school (urban only) 38 49 26 31 Private school 57 68 53 65
Arabic Grade 4 Grade 6 Grade 8 Grade 9 Male 25 33 39 40 Female 29
39 46 46 Urban 32 39 44 44 Rural 24 32 37 40 Source: CSE (National
Learning Assessment Program 2008) 33. The legacy of poor access to
education weighs on the adult population’s education capital. In
the past, few Moroccan males and even fewer females had access to
schooling, with only a small proportion reaching secondary and
higher education. Literacy rates have as a result long been low.
The effects of the recent increase in school enrollments, however,
can be seen in the positive trends in literacy over the past 25
years, with both overall rates increasing and (in the case of young
adults who have graduated more recently from the formal school
system) the gender gaps narrowing. III.A.3. School sector financing
34. The leveling-off in primary student enrollment10 that has
followed a demographic decline in the relevant school-age
population,11 along with the ongoing shift from public to private
provision,12 provides favorable conditions for a reallocation of
resources to support expansion of other levels of the education
system; at present, secondary education (lower secondary and upper
secondary combined) absorbs more than half of the education sector
budget. That said, there is room for achieving greater efficiencies
in the school education system, particularly at the secondary
level; at the broadest level, public spending, as a proportion of
both the overall national budget and GDP, is high by international
standards whereas results are average (primary enrollment rates) to
below-average (repetition rates, gender equity in secondary
education, scores in international learning assessment surveys).
Teacher remuneration, as measured against per capita GDP, is at the
high end of the international middle-income country range at the
primary level and very high at the secondary level; this results in
high per-student costs relative to comparable countries. Whereas
student-teacher ratios (although high by MENA standards) are now in
line with international norms, a large proportion of teachers at
the secondary level still do not teach the minimum number of weekly
hours (see Table 6).13
9 Percentage of questions receiving a correct response among the
target sample. 10 From 4,022,600 in 2004/05 to 4,016,934 in 2011/12
(Source: MEN). 11 Source: HCP 12 The share of students enrolled in
private education has gone from 6.6% in 2004/05 to 12.9% in 2011/12
at the primary level, and from 2.7% in 2004/05 to 7.2% in 2011/12
at the lower secondary level. 13 World Bank (2012) Education Public
Expenditure Review (draft).
-
13
Table 6: Share (%) of teachers teaching minimum number of weekly
hours, by level, 2008-2011 2008 2009 2010 2011 Primary Share of
teachers teaching minimum number of hours 95.1 97.2 93.6 99.0 Share
of teachers without teaching load 4.0 2.3 1.4 0.7 Lower Secondary
Share of teachers teaching minimum number of hours 34.2 40.2 43.0
59.3 Share of teachers without teaching load 3.3 3.5 3.1 1.2 Upper
Secondary Share of teachers teaching minimum number of hours 13.2
32.1 33.3 46.2 Share of teachers without teaching load 2.6 2.3 1.3
1.6 Source : MEN III.A.4. School sector governance 35.
Decentralization of the governance of the education sector is under
way, even though effectiveness of these reforms remains a key
challenge. The capacity of the Regional Education Offices (AREF),
which have been granted some administrative and financial autonomy,
has improved over time. The AREFs have played an important role in
leading the reform program at the regional and sub-regional levels.
36. There exists also an independent evaluation institution under
the Higher Council for Education (CSE) to evaluate system
performance and disseminate its findings and results. The
publication of its first report in April 2008 led to a welcome
debate among the various stakeholders on increasing outcome
measurements and accelerating the improvement of the education and
training sectors. This new institution is expected to help the
system manage for results and ensure greater accountability.
37. With increasing public awareness on quality of life, the
environmental protection and sustainable development agenda has
become a national priority. An Environmental Impact Assessment
(EIA) system consistent with international good practices is now
fully operational, at the national and regional levels, and
contributes to the mainstreaming of social and environmental
dimensions in development activities. The Government has
successfully developed the necessary EIA operational tools and
manuals14 for the preparation and review of the EIA system
including the appropriate procedures for public consultation as
well as an annual reporting of its activities and
achievements.15
38. The MEN applies an “Environmental and Social Protection
Framework”16 to its school construction program. The Framework aims
to prevent, attenuate or compensate for a range of negative impacts
that may arise from school construction, and ensure that: (i) the
safety and security of buildings’ users are guaranteed; (ii) energy
use is as efficient as
14 MEMEE : Référentiel sur les études d’impact sur
l’environnement,
http://www.environnement.gov.ma/PDFs/referentiel_eie.pdf 15 MEMEE:
Rapport annuel des activités du Comité national des études d’impact
sur l’environnement pour l’année 2011, Rapport annuel es Comités
régionaux des études d’impact sur l’environnement 16 Cadre de
protection environnementale et sociale
-
14
possible; (iii) buildings are accessible to disabled users; (iv)
sites are managed in ways that respect users’ and neighbors’ health
and well-being (e.g., efficient water use, waste management,
management of dangerous goods, proper use of safety equipment); and
(v) all land acquired is suitable for school construction. 39.
Accumulation of arrears in compensations for resettlement with
respect to land acquisitions has been a generic issue in Morocco.
Some structural weaknesses in the practices related to land
acquisition in the schools sector were noted in the assessments
carried out in 2009 by the World Bank and the AFD and
recommendations were made with a view to clear compensation claim
arrears and reduce the time taking to deal with new compensation
claims. Since 2009, the MEN and the MEF have put in place
mechanisms to better monitor land acquisition and related
compensation payments, and the MEF has settled a significant number
of compensation cases, over a period when, moreover, the volume of
new acquisitions through expropriation – whether measured in terms
of land area or land value – has decreased dramatically. The time
now taken to deal with new claims is on average three months.
III.A.5. Transition from school to work 40. Morocco’s
unemployment rate has fallen during the last years, thanks mainly
to the good economic growth that was brought about by the expansion
of the service, commerce and public works sectors and lower labor
force growth. The unemployment rate was reduced from 13 percent in
2000 to 8.9 percent in 2011. The difference between female and male
unemployment has also significantly diminished (9.6 percent for
women, 8.9 percent for men, in 2009). Unemployment rates are higher
in urban areas (13.7 percent) than in rural areas (3.9 percent),
for young people (17.6 percent for those aged 15-24), especially
those living in urban areas (31.3 percent), and for skilled
workers. Higher education graduates, however, represent only 20
percent of unemployed workers aged 15-34, while one-third of the
unemployed population has no diploma.17 Overall, it appears that
unemployment is much higher for graduates from “open enrollment”
university programs (22.3 percent), secondary education (21.7
percent) and vocational training (19.7 percent), particularly short
vocational training programs (25.2 percent). Unfortunately,
detailed information on the labor market entry rates of higher
education graduates – broken down by characteristics such as
region, discipline and level – is not yet available. Better
information is available for vocational training graduates, where
employment rates are significantly higher in some areas
(construction, engineering, fisheries and tourism) than in others
(textile, information technology and management). 41.
School-to-work transition is a major problem, with first-time
job-seekers representing half of the unemployed population.
Unemployment spells are mainly of long duration, especially in the
case of skilled workers. In fact, the incidence of long-term (i.e.,
longer than 12 months) unemployment is 83 percent among skilled
workers, compared with 60 percent among the unskilled unemployed.
This situation points to the structural nature of unemployment in
Morocco and the need for targeted interventions to retrain the
long-term unemployed and facilitate the job search process. Indeed,
long-term unemployment can reduce the chances of finding a job as
workers lose skills and because of negative signaling.
17 Source: HCP, 2010.
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15
42. Youth unemployment co-exists with a high level of
inactivity. According to a recent World Bank study,18 the
proportion of young men who are inactive (25 percent) is, in fact,
greater than the percentage of those who are unemployed (16
percent). Most young men are inactive because they are discouraged.
Ninety-three percent of young women with no education are out of
the labor force, compared to only 37 percent of young women with
higher education, suggesting higher returns to education as well as
their greater ability to overcome social barriers to participating
in the labor force. III.B. Government program
III.B.1. Socio-economic program 43. The PJD election platform
emphasized anti-corruption and set out policy proposals to deliver
on good governance, justice, revamping the delivery and quality of
social services and improving people’s economic inclusion. As part
of its mandate, the Government is charged with implementing the
changes proposed in the new Constitution as regards putting in
place a new institutional model based on separated, balanced and
complementary powers. In particular, the new Constitution
reinforces the principles of good governance, human rights,
protection of individual freedoms, as well as more responsibility
and accountability for institutions. These themes are all central
to the Government’s 2012-2016 program, which was presented to
Parliament in January 2012. 44. As regards good governance, the
areas of future focus are multiple, including public administration
reform, simplification of procedures, access to information, reform
of fiscal system, budget reform, regionalization and
decentralization, and a profound reform of the justice sector.
Social solidarity, participation and inclusion are all emphasized
with a special focus on youth and families. Improving the
transparency of economic and financial governance is given
particular mention with a strengthening of the Competition Council
and improving governance of state-owned enterprises.
45. For the period 2012-2016, the program aims for a growth rate
of 5.5 percent, an inflation rate of 2 percent, reducing
unemployment to 8 percent and aiming for a progressive reduction in
the budget deficit to 3 percent by 2016. Key areas of priority on
the economic front include strengthening the competitiveness of the
economy, improving the business climate, support to SMEs,
encouraging exports and land registry reform. Addressing
unemployment to bring the rate down to 8 percent by 2016 will
demand an integrated approach and includes measures to continue
support to employment creation programs undertaken to date and
introduction of new programs to insert the unemployed into
businesses and associations. Social assistance and pension reform
are also being pursued as part of a broader and more comprehensive
overhaul of the compensation system. III.B.2. Education Emergency
Program (PUEN) 2009-2012: project-based sector management 46. The
proposed operation itself recognizes the achievements of the second
half of the PUEN – 2011 and 2012 – and is aligned with the
directions set out in the draft Education Action Plan 2013-2016
(PAMT), which itself emphasizes continuity over the medium term in
education sector reform. As noted above, previous governments
implemented a
18 World Bank. [Ongoing]. Promoting Youth Opportunities and
Participation.
-
16
comprehensive set of reform measures in the education sector,
through the CNEF 1999-2009 and the PUEN 2009-2012. The impetus to
promote education reforms in Morocco came in part from the
publication of major sector reports, including (i) the World Bank’s
Flagship Report in 2008 (“The Road Not Traveled”)19 and (ii) the
CSE’s 2008 Annual Report.20 47. The fundamental guiding principle
of the PUEN placed the student at the heart of the education and
training system. The key goal was to provide the student with basic
competencies by establishing an environment conducive to learning
and using qualified teachers. The PUEN, spanning the period of
2009-12, drew on lessons learned during the previous decade, and
presented a comprehensive policy framework, with a sizeable
expenditure program (MAD 34 billion or US$4.1 billion), to
significantly improve education outcomes from pre-school to
university. The PUEN pursued four strategic directions: (i) achieve
universal basic education; (ii) promote initiative and excellence
in post-basic education; (iii) improve system performance
(teaching, management and stewardship); and (iv) mobilize and
utilize resources. Associated targets included increasing net
enrollment rates for pre-school, primary and lower secondary
education from 48.2 percent, 90.5 percent, and 42.7 percent in
2008/09 to 54.2 percent, 98.2 percent 56.4 percent, respectively by
2012/13. 48. Over the PUEN period, Morocco witnessed significant
results in primary education (with near-universal access for girls
and boys alike, lower repetition and drop-out rates and higher
completion rates), but less dramatic improvements in lower
secondary education (with large gaps between urban and rural
participation and stubbornly high rates of repetition and
drop-out). There was strong program ownership within the MEN and
AREFs (with, however, a notable lack of coordination across key
PUEN projects), but it was noted that province-level and
particularly school-level players (namely, school principals and
teachers) were not sufficiently equipped to deliver the reforms
effectively in the classroom. This was particularly true, for
example, of the projects aimed at identifying and remedying weak
learning performance through a child-centered, skills-based
pedagogy. Whereas PUEN implementation was well supported through
administrative documentation (circulars, guidelines and other
written materials), school principals and classroom teachers had
little access to professional support from trainers, inspectors and
other resource staff and suffered at times from a lack of
cross-project coordination. Finally, while the decentralization
agenda allowed important decisions to be taken locally on the basis
of local information, the decentralized entities (in particular the
AREFs) often did not have the systems and tools to manage PUEN
implementation effectively. III.B.2. Education Action Plan (PAMT)
2013-2016: quality schools and classrooms 49. Human development is
prioritized in the current Government’s program. For the health
sector, reducing infant and maternal mortality in order to achieve
the MDGs is the main priority. Supporting the National Initiative
for Human Development (INDH) is also key to the plan, as is the
need to address housing shortages and focusing on women, youth and
disadvantaged people. In the area of education, the Government’s
manifesto,21 adopted by the
19 Report No. 46789:
http://siteresources.worldbank.org/INTMENA/Resources/EDU_Flagship_Full_ENG.pdf
20 CSE. 2008. Rapport annuel 2008: Etat et perspectives du système
d’éducation et de formation. Rabat: CSE 21
http://www.maroc.ma/NR/rdonlyres/62F451B1-275B-4A3D-B024-B9E018A7362F/0/Programme_Gouvernement_2012_BON.pdf
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Moroccan parliament on January 26, 2012, linked the quality of
education to appropriate governance arrangements. The central theme
is to push decentralization to the school level. On August 20,
2012, the King of Morocco, in a speech centered around youth,22
indicated that education was at the top of the list of national
priorities; he stressed the importance not just of equitable access
to education and training but also of equitable access to quality
learning opportunities, which he defined as equipping young people
for “the life that awaits them” and which therefore requires
teachers to adopt a student-centered approach that encourages
critical thinking rather than memorization of facts.
50. The draft PAMT 2013-2016, currently under internal
discussion and external consultation, adopts three principles that
are derived from lessons learned during the implementation of the
CNEF 1999-2009 and the PUEN 2009-2012: (i) the PAMT 2013-2016 will
consolidate and extend the achievements of the earlier cycles with
a view to long-term improvements, rather than engage in a radically
new direction; (ii) major efforts will be made to better prioritize
key policy interventions, in order to focus resources on realistic
goals; and (iii) these policy interventions will be implemented in
ways that rely on improved coordination and greater coherency
between the various actors, both vertically (between central,
regional, provincial and school levels) and horizontally (across
services at a given level). The key policy interventions, organized
into four groupings, are an extension of the PUEN achievements: (a)
access and equity; (b) teaching and learning quality; (c)
governance and decentralization, through to the school level; and
(d) human resource management. The PAMT is likely to have an even
greater emphasis than the PUEN on school-based management and
classroom-based teaching practices, as the Government is eager both
to ensure that school principals and teachers are better empowered
and supported and that the reforms designed at higher levels truly
impact student learning achievement. III.C. Implementation
costs
51. As seen in Figure 3, the Government backed its commitment to
the PUEN 2009-2012 by increasing the budget allocated to the school
education sector, with a significant initial boost in 2009. Over
the period of PUEN implementation, public expenditure on school
education has remained steady as a share of GDP around 6 percent
and has fluctuated somewhat as a share of the overall State budget
around 25 percent. This fiscal effort has focused on non-salary
expenditures, with the share of the budget going to investment and
non-salary recurrent items rising from 16.6 percent in 2008 to 25.7
percent in 2009, 26.5 percent in 2010, 31.9 percent in 2011 and
27.7 percent in 2012. The overall cost of the PUEN 2009-2012 was
estimated at MAD 34.0 billion (US$4.1 billion), averaging MAD 8.5
billion per year, which corresponds to largest part of the
investment and non-salary recurrent budget. The cost has been
shared between the Government (around four-fifths) and the TFPs
(around one-fifth).
22
http://www.maroc.ma/NR/rdonlyres/00002847/pisucmbspfzncmtmmvtoyzhcpqkmyrpw/TexteintégraldudiscoursRoya20aoutl.pdf
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Figure 3: School Education Budget 2005-2012, as amounts in MAD
billions (primary y-axis) and as share of State budget and GDP
(secondary y-axis)
Source: MEN
52. Table 7 shows the amounts committed by the TFPs other than
the World Bank, provided either through investment operations
(“invest”) or through budget support operations (“budget”).
Table 7: Commitments by Technical and Financial Partners to the
Government’s Education Emergency Program (in EU€ million)
2009 2010 2011 2012 2013* Total Type AECID 4.0 4.0 4.0 12.0
Budget AFD 10.0 12.5 12.5 15.0 50.0 Invest AfDB 37.0 38.0 113.0
188.0 Budget EIB23 60.0 60.0 60.0 20.0 200.0 Invest IBRD 44.2 78.1
122.3 Budget JICA 73.8 73.8 Hybrid EU 30.0 21.0 21.0 21.0 93.0
Budget NIF24 5.0 5.0 5.0 15.0 Invest Total 142.0 146.7 140.5 60.0
264.9 754.1
Source: TFPs; *amounts scheduled for 2013 have not yet been
committed. III.D. Participatory process
53. Since 2006, the CSE has served as the main forum for
wide-ranging consultation on education policy. The CSE, which
answers directly to the King, has around 100 members drawn from the
Government, the Parliament, specialized State entities, MEN staff,
AREFs, universities, teacher unions, parent associations, student
organizations, industry, and NGOs. The CSE is consulted on all
education reform, advises on all national education matters and
carries out comprehensive evaluations of the national education
system of education. With
23 EIB’s commitment amounts may vary from year to year, within
the fixed total amount. 24 The Neighborhood Investment Facility
(NIF) is a separate funding facility financed by contributions from
EC and member states.
0%
5%
10%
15%
20%
25%
30%
35%
0
10,000
20,000
30,000
40,000
50,000
60,000
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
Recurrent
Investment
Share State budget
Share GDP
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the CSE, Morocco has a permanent and independent source of
advice that reflects the different components of society. 54. As
part of the development of its PUEN 2009-2012, the Government
engaged in consultations with various stakeholders. In the fall of
2007, the King of Morocco instructed the Government to develop the
PUEN to speed up the implementation of the education reform agenda.
During the first round of program development, the consulting firm
hired to provide technical assistance to the Government consulted
with regional and provincial education officials, focusing on a
number of pilot sites. In a second round, the MEN met with
parliamentarians and teacher union representatives to present the
draft program and receive feedback. With the third round of
development, the MEN tested the feasibility of the final draft by
consulting with governors, as well as regional and provincial
education officials, in a series of regional forums, again in pilot
sites. 55. In preparing its PAMT 2013-2016, the MEN intends to
consult with a range of stakeholders both inside and outside the
education sector – teacher unions, parents, students, communities –
before presenting the program to the CSE for validation and then to
the Government for final approval. IV. BANK SUPPORT TO THE
GOVERNMENT’S STRATEGY
IV.A. Link to the Country Partnership Strategy
56. The Country Partnership Strategy25,26 (CPS) comprises three
pillars. These pillars are: (i) encouraging growth, competitiveness
and employment; (ii) improving quality service delivery to
citizens; and (iii) promoting sustainable development within the
context of climate change. Other cross cutting themes, such as
regional development, governance, public private partnerships, and
regional integration, are also covered. The proposed operation is
part of the Bank’s support to the second CPS pillar and, as such,
will address the issue of quality education service delivery
through: (a) improved management of the sector by way of increased
decentralization to, and accountability of, the AREFs; (b)
increased targeting as a means to reach the most vulnerable; and
(c) enhanced accountability of education personnel. The proposed
operation is also aligned with the Bank’s new framework for
engagement in MENA, with its focus on improving the social and
economic inclusion of disadvantaged groups, strengthening
governance through transparency and accountability, and on gender
equality.
IV.B. Collaboration with the International Monetary Fund and
other donors
57. The World Bank and the IMF maintain a close collaboration in
Morocco. Regular exchanges between Fund and Bank country teams are
customary. Discussions focus on the respective work programs,
country priorities, recent developments and prospects, and reflect
the growing weight of DPLs in the Bank’s Morocco portfolio. The
Fund participates in Bank project review meetings where relevant.
Similarly, Bank staff was consulted in the context of
25 World Bank. 2009. Country Partnership Strategy for the
Kingdom of Morocco for the Period FY10-13. (No. 50316-MA) 26 World
Bank. 2012. Country Partnership Strategy Progress Report for the
Kingdom of Morocco for the Period FY10-13. (No. 67694-MA)
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the IMF’s 2012 Article IV consultation with Morocco, which was
concluded by the IMF’s Board on February 1, 2013. The IMF has also
completed its first review of Morocco’s performance under the
economic program supported by the PLL arrangement (approved on
August 3, 2012 in an amount equivalent to about US$6.2 billion) and
reaffirmed Morocco’s continued qualification to access PLL
resources. The Public Information Notice issued by the IMF on
February 5, 2013 is provided in Annex 4. 58. The proposed operation
was prepared in close consultation and coordination with main
donors active in Morocco’s education sector. The Government
demonstrated great interest in the results of the Paris Declaration
on Aid Effectiveness. As a result, the Government requested the
World Bank and the donor community to support the reform program,
using the principles of the Declaration. A non-binding partnership
framework has been signed by the Government and a wide group of
donor representatives (including the World Bank) with a view to
encouraging donor support in the education sector.
59. The World Bank works closely with other donors. In line with
the main principles put forward by the partnership framework, the
World Bank joined with six major sector donors (AECID, AFD, AfDB,
EIB, EU and JICA) to form the TFP Group, offering technical and
financial support to the Government as it implemented its PUEN.
This level of harmonization among major donors marks an important
advance in donor relations with the Government. AECID, AfDB, EU and
the World Bank are providing their funds in the form of budget
support; AFD and EIB (along with the EU’s Neighborhood Investment
Facility [NIF]) are providing programmatic investment financing;
JICA is using a hybrid instrument, partly budget support (adopting
the World Bank’s policy matrix and adding four prior actions of its
own related especially to school-level management)27 and partly
project investment financing.
60. The TFP Group worked together with the Government to
establish a common results framework and common monitoring and
reporting arrangements that underpin each TFP’s support of the
PUEN. While the overall results framework is common to all TFPs,
each TFP has its own financing operation with prior actions that
differ slightly from one to another. All TFPs other than the World
Bank have signed their respective financing agreements with the
Government, for a total commitment amount of EU€ 433.0 million
(US$579.2 million equivalent) over four years. To provide a
structure for coordinating their parallel financing operations with
the Government’s own PUEN implementation, the TFPs and the
Government developed a memorandum of understanding and an
associated operational manual. The memorandum28 has been signed by
the Government, AFD, AfDB, EU and EIB; while the World Bank has not
signed the memorandum, it operates in accordance with the
principles set out therein.
27 JICA-specific prior actions: [1] Reinforce the concept of
monitoring the school and support mechanisms to improve education
and learning processes; [2] Ensure the effective implementation of
the « school project » based on the new concept; [3] Develop and
formalize organizational, pedagogical and technical process of
implementation of Regional Teacher Training Centers; and [4]
Motivate parents and community members to enroll and keep their
children in school at the level of basic education (primary and
secondary). 28 The memorandum provides that where there is a
conflict between the memorandum and the individual financing
agreements the latter prevail.
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IV.C. Relationship to other Bank operations
61. The Bank has a long history of active engagement in
Morocco’s education and other social sectors. Over the past decade,
four relevant projects -- Social Priorities (Education) Program
(4024-MOR), Alpha Maroc (Adult Literacy) Project (4607-MOR), Social
Development Agency Project (4661-MOR) and PARSEM (7273-MOR) -- were
fully executed. These operations assisted the Government in: (i)
increasing access to basic education, literacy and other social
services; and (ii) improving the quality and effectiveness of
service delivery. Overall, these projects were implemented
successfully with respect to the objective of increasing access to
basic services and promoting participatory approaches and
partnership arrangements.29 The Social Priorities (Education)
Program and the Social Development Agency project results were
remarkable in this regard. Achievements regarding quality of
service delivery were less positive. 62. The proposed Second
Education Development Loan (EDPL2) builds on the First Education
Development Loan (EDPL1) (7879-MOR), which closed on March 31,
2011. These two basic education operations are complemented by
other DPLs under preparation that seek to address other key
constraints to promoting the type of growth that will create good
quality jobs in Morocco and that target service delivery
improvements in education and skills and in other areas of the
public administration system. The dialogue across these different
operations (see descriptions below) has been closely
coordinated.
63. The First Skills and Employment DPL, developed through a
partnership bringing together four ministries – education, labor,
finance and economic affairs – seeks to: (i) match skills developed
within the vocational training and higher education systems to the
needs of the labor market; (ii) improve the effectiveness of
intermediation services, including active labor market programs;
(iii) improve job quality; and (iv) strengthen the labor market
information system.
64. The First Economic Competitiveness Support Program DPL aims
at: (i) improving the investment climate, in particular by removing
barriers to entry and competition, simplifying the regulatory
environment for doing business and reducing discretion in the
implementation of the rules by increasing transparency and access
to information; (ii) furthering trade policy reform and trade
facilitation, in particular by pursuing the ongoing tariff
rationalization (levels and bands), strengthening the regulatory
framework for import standards and easing logistics at ports of
entry; and (iii) improving economic governance, by strengthening
significantly the Competition Agency’s missions and prerogatives,
increasing transparency and accountability in the way the
investment incentives are granted and sectoral policies conducted,
and strengthening the public-private coordination body for
investment climate reforms.
65. The Second Financial Sector DPL (under preparation)
continues to support the reform agenda already initiated under the
First Financial Sector DPL approved by the Board in January 2010.
Specifically, it fosters: (i) household and small and medium
enterprises (SME) access to financial services; (ii) increased
financial stability, supervision and regulation; and (iii) capital
market development. Key reforms supported include a new guarantee
scheme targeting micro-enterprises and measures to strengthen the
functioning of private equity markets.
29 PARSEM was closed in June 2009 and the ICR delivered in
December 2009.
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66. The Accountability and Transparency DPL is being prepared to
build on the Bank’s previous engagement in public sector
administration reform. There is broad agreement with the Government
that this new DPL series will focus on accountability, transparency
and public service delivery reforms, in line with the goals and
objectives of Morocco's transition as envisaged under the new
constitution, thus focusing on school to work transition. IV.D.
Lessons learned
67. The proposed operation design was informed by lessons
learned from the above-mentioned projects and sector DPLs in
Morocco, as well as from general experience with human development
sector DPLs implemented in other countries. Main lessons learned
are summarized below, first those concerning education policy and
second those linked to reform processes. IV.D.1. Education policy
lessons 68. International experience brings to bear lessons on a
number of areas that are featured in the proposed operation. 69.
First, demand-side interventions have improved retention where they
include conditional cash transfers (used in contexts as diverse as
Mexico and New York), school transport, school feeding (supported
throughout the developing world by the World Food Program).
70. Second, assessing student performance is critical to inform
practitioners (teachers, school leadership, as well as local and
national decision-makers) of the true level of students and
schools. In addition, disseminating results to concerned
stakeholders, like parents and communities, has been shown to exert
a positive effect on the accountability of education providers
because assessment results give content to a stakeholder’s
voice.30
71. Third, pre- and in-service training should focus on adapted
instructional practices for: (i) improving literacy in early grades
(which could include pilots on using national languages, such as
those used in West Africa, for example, in the Gambia); (ii)
teaching to heterogeneous learning levels (differentiated pedagogy
is used in France); and (iii) remedial instruction. International
evidence reveals that all these have the potential to improve
repetition and drop-out rates. Workshops to demonstrate how best to
use the student record booklet would also be beneficial, as these
can form the basis of personalized work plans for students. Good
monitoring of teacher in-service training is essential to discover
to what extent the lessons have been appropriated by the learner
(the in-service teachers in this case) and how they will change
their instructional practices in class. This is the only way the
efficacy of the in-service modules can be gauged; waiting for class
inspections is too late. In the absence of effective in-service
training, collaboration – the extent to which educators work
together on behalf of students – is also an important predictor of
success. Teachers who work closely with other teachers to improve
their instruction, adhere to the norms associated with peer
review.31
30 World Bank, 2011, Making Schools Work: New Evidence on
Accountability Reforms 31 Fullan, M., 2011, Choosing the Wrong
Drivers for Whole System Reform
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23
72. Fourth, school-based management initiatives should focus in
their action plans on improving school climate, which directly
affects retention. International evidence from TIMSS 2011 reveals
that, in Morocco, only 29 percent of Grade 4 and 26 percent of
Grade 8 Moroccan students report that their school is ‘safe and
orderly’ compared to the international average of 45 percent and 49
percent for the same grades. International research shows that when
education authorities delegate more responsibilities to schools to
mobilize and manage the inputs necessary to address local
circumstances and changing demand for education services, there is
a wide range of configurations possible. Nevertheless, more
autonomous schools have three features of note: (i) the margin of
freedom of schools to acquire and manage resources (financial,
human, material) as they see fit to meet expected results; (ii) the
possibility of diversifying sources of revenue; and (iii) greater
use of performance-based agreements tied to resource allocation.
73. Within the Morocco setting, the EDPL1 Implementation Completion
and Results Report32 showed that many of the EDPL1 prior actions
“set the ground” for longer term improvement in educational
outcomes. For example, the results of the first national student
learning survey (EDPL1 Prior Action1.2) provoked public debate in
the quality of education. The transfer of initial pre-service
teacher training to universities (EDPL1 Prior