Morocco

Bright outlook dependent on rainfall

The acceleration of growth in 2025 will depend on the performance of the agricultural sector, which accounts for 11% of GDP and 30% of Moroccan employment. Drought has impacted harvests for the past three years and could continue to do so during the 2024-2025 season due to a persistently high water deficit. Conversely, improved rainfall would boost employment, exports and growth. The fishing industry (2% of GDP and 7% of total exports) should remain resilient despite the annulment of the agreement with the EU by the Court of Justice of the European Union.

The economy will still be able to rely on other sectors, particularly services, as tourism is still booming. In 2024, tourism receipts rose by 7.5%, supported by a 20% increase in arrivals. The manufacturing sector will continue to be buoyant, with higher value-added exports in the automotive, aeronautical and textile sectors. Phosphate and fertilisers will see further growth with the expansion of Morocco's share of the world phosphate market, given the fact it holds 70% of the world's reserves.

In addition, private and public investment in renewable energies, particularly green hydrogen, wind and solar power, will remain buoyant. The government wishes to develop the electricity network and has earmarked 18.2 billion dirhams (1.8 billion euros) in the 2025 Finance Law to strengthen its energy sovereignty. Spending will also be directed towards water infrastructure (desalination plants and dams) and transport. As one of the host countries of the 2030 FIFA World Cup, the country has budgeted EUR 9 billion to modernise and extend its road infrastructure, of which EUR 2.8 billion has already been spent on the purchase of 168 new trains in February 2025. Reconstruction following the earthquake which hit the northern slopes of the High Atlas in September 2023 will also shore up growth. Household demand will remain robust, as purchasing power will be supported by social benefits and pay rises for all civil servants and agricultural workers, as well as an increase in the minimum wage. Spending will also be driven by remittances from the diaspora (8% of GDP in 2023) and low inflation. Inflation is nevertheless expected to rise slightly as a result of higher public wages and buoyant demand.

Social development, the linchpin of fiscal policy

In 2024, the budget deficit narrowed thanks to tax reforms that broadened the tax base and increased revenues. This brought the deficit closer to the government's target of 3% by 2026. However, the trend is not expected to continue in 2025 owing to major spending on infrastructure and social welfare. Further tax cuts for low- and middle-income households are planned, while in July the second phase of the 50% increase in the monthly minimum wage in the public sector will come into effect. This increase will contribute to an 11.5% rise in payroll costs. In addition, in response to the rising cost of living and the difficulties facing the agricultural sector, the government will maintain several subsidies, with the exception of the butane subsidy which was gradually phased out after May 2024. With regard to agriculture, seed subsidies have been distributed for the 2024-2025 season, while temporary VAT exemptions will apply in 2025 on imports of certain live animals and agricultural products. Under the 2025 Finance Act, the Moroccan government has earmarked 14.2 billion dirhams (around €1.37 billion) for the sector, an increase of 4%. Another major item of expenditure concerns post-earthquake reconstruction, for which the plan is budgeted at 11 billion euros, or 8.5% of GDP, over five years. Financed in the budget is a contribution of two billion dirhams (EUR 193 million) from the Hassan II Fund for Economic and Social Development and international aid (solidarity funds, multilateral loans and grants). Last, Morocco will able to draw until April 2025 on the USD 5 billion flexible credit line granted by the IMF in April 2023. The line is used as a hedge to secure financing, but has not yet been drawn down so the country hopes it will be renewed. Accordingly, the public debt ratio should gradually fall on back of a stabilised public deficit and slightly more robust growth. External debt accounts for just under half of the total public debt.

Morocco's large trade deficit will be fuelled by growth in imports linked to infrastructure projects, reconstruction and robust domestic demand. The volatility of cereal production could increase the import bill in the event of poor harvests. Exports will continue to be underpinned by phosphate and its derivatives, as well as by automobiles, aeronautics, textiles and leather. The opening of the second terminal at the port of Tangiers will reduce trade and logistics costs. On the services side, the surplus is fuelled by tourism receipts, which will be boosted by the hosting of the African Cup of Nations. Workers' remittances from the European Union and the Gulf countries will fuel the surplus in secondary income. The moderate current account deficit will be financed by external borrowing and net FDI inflows, the latter having increased by more than 50% in 2024, representing around 1.3% of GDP. Stable reserves will cover 5.5 months of imports.

Political stability and stand-off with Algeria

Prime Minister Aziz Akhannouch, who has been in power since 2021, leads the Rassemblement National des Indépendants (RNI), which is the majority party in a centre-right coalition. The next election for the House of Representatives, the lower house of Parliament, is scheduled for September 2026. The country is politically stable despite some popular discontent related to the high unemployment rate (13.3%) and the high cost of living, which is the result of recurrent droughts that affect harvests.

Demonstrations also occurred to denounce the partnership with Israel which have escalated since the war in Gaza. Guided by the US, which recognised Moroccan sovereignty over the Western Sahara, the two countries re-established official diplomatic relations in December 2020. As part of their security partnership, Morocco signed a contract in February 2025 to supply artillery systems from Israeli manufacturer Elbit Systems. Tensions with Algeria, a supporter of the Polisario Front, which controls a third of Western Sahara, are set to persist, while Morocco and Mauritania have announced the opening of a new land border crossing in 2025. This will give the Sahel countries a new point of access to the Atlantic. On the European side, Spain and later France approved the Moroccan autonomy plan for the territory in 2022 and 2024, respectively. Their decisions came in the wake of migratory movements towards Europe, with Morocco constituting a bridgehead for African migrants. In 2023, the EU also increased its partnership programme with Morocco to EUR 624 million to finance border control and green energy projects. However, relations with the European Union as a whole will remain tense over press freedom, corruption and the Western Sahara. In October 2024, the European Court of Justice ruled that the fisheries and agriculture agreements signed between the EU and Morocco in 2019 were invalid, stating that the people of Western Sahara had not been adequately consulted.

Payment

Bank transfers are becoming the most popular means of payment for both domestic and international transactions. Cheques are still commonly used as instrument of payment and also constitute efficient debt recognition titles: debtors may be prosecuted if they fail to pay the amount owed. Bills of exchange also constitute an attractive means of payment, because they are a source of short-term financing by means of discounting, instalment, or transfer. Promissory notes are used to record the financial details of personal debts, business debts and real estate transactions. They are legally binding contracts that can be used in a court of law if the debtor defaults. A promissory note acts as solid evidence of an agreed payment, and subsequently debt in case of dispute.

Debt Collection

Amicable phase

Debt collection must begin with an attempt to reach an amicable settlement. Creditors attempt to contact their debtors through different means (telephone calls, written reminders such as formal letters, emails or extrajudicial notifications, etc.). Amicable settlement negotiations can be intense, and cover aspects such as the number of payment instalments, write-offs, guarantees/collateral, and grace period interest. Moroccan law states that a lawyer can acknowledge the signature of the debtor via payment plans, which are signed, certified, and legalized by the competent authorities in Morocco. The creditors’ lawyer can subsequently use this payment agreement as debt recognition in case of legal action.

Legal proceedings

Morocco has a legal system based on French legal tradition and courts based on Islamic traditions (which relate exclusively to the personal status of litigants). Courts include proximity courts (juridictions de proximité) in charge of settling disputes between individuals, Courts of First Instance (tribunaux de première instance) dealing with all civil matters, Commercial Courts dealing with business disputes, Appellate Courts (cours d’appel) dealing with civil and administrative matters, and a Court of Cassation (Cour de cassation).

Emergency proceedings

Where the debt is linked to a recognised title or promise, it is possible to obtain an order for payment. To do this, an application must be sent to the registry of the competent court. The debt must be proven, liquid (i.e. free), payable and not disputed. If the defendant does not file a defence within eight days, it is possible to obtain an enforceable decision. If the defendant submits a defence within eight days of receiving the order for payment, the case is returned to the ordinary procedure. However, the appeals chamber of the court of first instance or the court of appeal may, by reasoned judgment, suspend enforcement in whole or in part.

Ordinary proceedings

A writ of summons is sent by the creditor’s representative to the relevant court and served by a bailiff to the debtor, who may subsequently obtain legal representation in the period prescribed by the judge and file a counter claim. Several hearings may be required for the exchange of written submissions, transmissions of documents and to produce the relevant evidence.

The main hearing is set by the judge to hear the presentation of the pleadings. Discussions and pleadings are conducted by the judge during the public hearing. The case is then taken under deliberation to allow judges to discuss the means, grounds, and pronouncement that make up the content of the judgment. After the sitting of the judgers, a reasoned judgment is rendered. It can usually be obtained within an average delivery time of 14 months.

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Enforcement of a Legal Decision

Once all appeal venues have been exhausted, a judgment becomes final and enforceable. Garnishee orders are normally efficient for seizing and selling the debtor’s assets.

According to Moroccan law, commercial courts are obliged to recognize judgments rendered abroad, even if there is no convention signed for this purposes with the issuing country. In order to be recognized and enforced, the original copy of the foreign judgment must be provided to the court with a certificate of non-appeal. When a foreigner gets final judgment that they want to enforce in Morocco and, if not, when seeking enforcement of a Moroccan judgment abroad, they must follow exequatur proceedings. There are two enforcement procedures. The first is uniquely Moroccan, whereas the second is fixed by judicial bilateral agreement between Morocco and other countries, including Germany, Belgium, the United States of America, the United Arab Emirates, Spain, France, Italy and Libya.

Insolvency Proceedings

Insolvency proceedings are regulated by Book V of the Commercial Code. It provides for prevention of difficulties (alert procedure and amicable settlement procedure) as well as formal insolvency procedures (judicial redress proceedings and judicial liquidation proceedings).

Because of the COVID-19 situation, Morocco has taken two measures in the framework of the insolvency proceedings:

The possibility for debtor companies to initiate the procedure to request a grace period to enable them to legally suspend payments (if the insolvency is caused by COVID-19).

The possibility of obtaining a stimulus credit dedicated to companies impacted by COVID-19.

ALERT PROCEDURE

The alert procedure is initiated by a business’ partners or auditors (external auditors hired by the company to rectify the financial situation), who are required to notify the company manager of any opportunities to redress the situation within eight days. If no steps are taken to remedy the situation within 15 days, a general assembly must be convened to take a decision on how to redress the situation based on the auditor’s report.

AMICABLE SETTLEMENT PROCEDURE (CONCILIATION)

Amicable settlement procedures can only be implemented by a commercial company, trader, or artisan, who is experiencing financial difficulties but is not yet cash flow insolvent. Once initiated, the debtor is placed under the supervision of the Court. The Court subsequently appoints an external conciliator for a limited period of three months to assist the debtor in reaching an agreement with its creditors. A settlement can be reached with all creditors or the debtor’s “main creditors”. Creditors are entitled to their entire claim, but the conciliator may propose an arrangement or creditors may assign a portion of the debt if they so wish. Once approved by the Court, all judicial proceedings relating to debts covered by the agreement are suspended for the duration of the amicable settlement agreement.

SAFEGUARD PROCEDURE

This is mechanism is intended to allow a company to reorganize in order to continue to survive. To benefit from it, the company must establish that it is not in a state of cessation of payments. However, in the context of this procedure, it is still possible to negotiate with your creditors, in order to avoid arriving at to this cessation of payments, to the receivership proceedings. It is the company that seizes the court, which pronounces a judgment of opening of the safeguard procedure. The procedure starts with a six-month observation period (renewable once) during which the insolvency administrator, in collaboration with the manager, draws up a “economic and social balance sheet” (BES) for the company: an update on the origin of the difficulties, he current financial situation, the corrective measures to be envisaged and the resulting prospects. During this period, the company takes appropriate measures to correct the situation, and it helps the administrator to develop a backup plan. The adoption of such a plan by the court marks the end of the observation period and the beginning of the actual plan, which can last up to five years. Here again, the manager remains master aboard his company but, above all, the company will benefit from radical measures that the court can only impose:

suspension of maturities of debts;

stop individual prosecutions;

obligation for all creditors to declare their claims;

stop interest rate.

JUDICIAL RECEIVERSHIP

This procedure is only available for debtors that have become insolvent (état de cessation de paiements), but whose financial situation is not irreparably compromised. An insolvency judge and an office holder (the person appointed by the court as part of an insolvency or liquidation; also acts as the syndicate) are appointed by the court. During the process, the debtor company and its management remain in possession of the company’s assets and the debtor continues its business. The receivership procedure can result in either the reorganisation of the debtor’s business or its liquidation. The office holder is required to prepare a report on the situation of the company within four months from the opening of the proceedings. In his report, the office holder will either recommend a continuation plan for the debtor, the sale of the business, or liquidation. The court is then required to reach a decision on the fate of the debtor, based on the report. There is no direct vote by the creditors on the options available to the debtor during the procedure.

JUDICIAL LIQUIDATION

The judgment initiating the procedure makes all the debts immediately due and payable, the creditors within a period of two months must present their claims. Moroccan creditors have two months to submit their declarations; creditors residing abroad have a period of four months. Liquidation proceedings may terminate prematurely before a distribution in liquidation if the debtor has no more debt, the office holder has sufficient funds to pay all the creditors in their entirety, or the debtor does not have enough assets to cover the costs of the liquidation procedure.

Under Moroccan law, there are no specific rules on the priority of claims in the event of insolvency. Nevertheless, there are some privileged creditors such as: the employees, the public treasury, the social agencies, the creditors of a collective conciliation, finally the unsecured creditors.

Last updated:March 2025