Trade and Project Financing

Banking System

Morocco is in the process of developing a relatively
comprehensive banking system, originally modeled after the French
system.  There are 16 major banks in the country plus five
government owned specialized financial institutions, about 15
credit agencies and about 10 leasing companies.  Other elements
of the financial infrastructure include insurance companies,
pension funds, and the Casablanca stock exchange.

Until 1991, credit and money supply was controlled directly by
the old French-style "encadrement system" allocating sectoral
lending among banks based on historical patterns.  Since
financial liberalization, credit is supposed to be allocated
freely, with the central bank using indirect methods to control
the interest rate and volume of credit.  The banking system is
still used by the government, however, as a way to channel
domestic savings to finance government debt, and the banks are
required to hold a part of their assets in bonds paying below
market interest rates.

A new bank reform law, promulgated in 1993, clearly laid out the
parameters of banking activities, clarified oversight and control
responsibilities, specified legal penalties for violations of
banking regulations, and established a depositors guarantee fund.

Foreign Exchange Controls Affecting Trading

Morocco maintains a system of foreign exchange controls, managed
by a government agency, the Office de Changes, but the rules on
transfers have been progressively liberalized to the point where
the dirham is freely convertible according to the IMF definition
for current account transactions.  The value of the dirham is
tied to a basket of hard currencies weighted according to
Morocco's foreign trade.  Because this basket is dominated by
European currencies, variations in the dollar/franc or
dollar/deutchmark rates are generally reflected in the dirham's
dollar value.

Authority to buy and sell foreign exchange has been delegated to
the banking system, which will carry out transactions on
presentation of appropriate documentation justifying the
transaction such as an invoice to pay for imports.  Capital
transactions require authorization from the "Office de Changes",
which  grants it routinely for business-related transactions.
Under its investment code, the government offers a guarantee of
repatriation of both invested capital and profits, provided that
the initial investment was declared on the way into Morocco.

Local financing is available for Moroccan investors and
importers, but real interest rates are high by American
standards, and Moroccan Banks generally require a high degree of
security (e.g. collateral and personal signature) before
committing themselves.

How to Finance

Most Moroccan imports are paid for by irrevocable confirmed
letters of credit issued by major local banks with U.S. banking
correspondence.  Within the country, end-users are normally given
up to 90 day credit by importers.

Types of Export Financing and Insurance

Exporters naturally want to get paid as quickly as possible, and
importers usually prefer delaying payment at least until they
have received and resold the goods. Because of the intense
competition for export markets, being able to offer good payment
terms is often necessary to make a sale.  Exporters should be
aware of the many financing options open to them in Morocco.

Five U.S. Government agencies provide financial consulting
services to exporters through the Trade Promoting Coordinating
Committee, a Washington based group that includes the Commerce
Department, Ex-Im Bank, Small Business Administration, Overseas
Private Investment Corporation, and the Trade Development Agency.

The Commerce Department's new office of Multilateral Development
Bank Operations (MDBO) provides one-stop shopping services to
U.S. firms interested in doing business with the MDBs.  Its staff
can help U.S. companies get a share of major contracts financed
by the multilateral development banks. For more information on
any of these services in the U.S., contact MDBO at  (202)
482-3399 or fax (202) 273-0927.

Financing for U.S. exports in the form of loans or guarantees is
available through Ex-Im Bank.  However, a Moroccan guarantee,
either from the government or from a private bank, may also be
required.  Ex-Im Bank has established a small bundling facility
(a line of guaranteed credits of USD 10.0 million) with Credit du
Maroc (CDM).  Although other Moroccan banks have expressed some
interest in this program, they have not overcome the reluctance
of Moroccan importers to take on the foreign exchange risk of
borrowing in dollars.  The principal multilateral financial
institutions such as the World Bank, the IFC, the African
Development bank, and the European Investment Bank all lend to
Morocco for infrastructure development.

The USDA Credit Guarantee Programs USD 100 million (GSM-102/3)
are made available to Morocco to purchase various agricultural
commodities from the US. The GSM-103 line, initially used by the
GOM, has been made available to the Moroccan private sector
importers through the BCM bank for fiscal year 1998. The list of
eligble commodities has been extended to cover in addition to
wheat and feed grains other commodities such as livestock,
cotton, vegetable oil, oilseeds, and planting seeds. The private
importers can benefit from up to 6 months financing and the GOM
supports the exchange risk as the payment to the Moroccan bank
are made in dirhams. The private sector GSM-102 line, provides
$10 million for wheat, pulses, planting seeds, livestock, cotton,
and dairy products. For more information about this program,
please contact the office of the Agricultural Attache in Rabat at
(212-7)765987/Fax:(212-7)765493.

Citicorp Structured Trade Finance, in cooperation with OPIC, now
offers a new approach to African trade finance for U.S. exporters
to Africa.  The African Trade Finance Facility (ATFF) was
developed jointly by Citicorp and OPIC to address the lack of
availability of financing.  To obtain more information, contact
one of the following addresses.

A. Citicorp Structured Trade Finance
Tel: (212) 559-7998; Fax: (212) 793-2330
CITICORP
399 Park Avenue, 5/13
New York, N.Y. 10043

B. Overseas Private Investment Corporation (OPIC)
Tel: (202) 336-8576 or (202) 408-5142
Fax: (202) 408-5142
1100 New York Avenue, N.W.
Washington, D.C. 20527

Before proceeding with any international transaction, it is
advisable to contact your local USDOC District Office for
counseling and further information about the market.

The International Finance Assistance Section (which can be found
under that topic heading on the NTDB), provides not only
information on specific assistance available from USG financing
agencies such as the U.S. Ex-Im Bank and OPIC, but also
information on the Multilateral Development Banks.

The World Bank Group is a multilateral lending agency consisting
of four closely related institutions: the International Bank for
Reconstruction (IBRD), the International Development Association
(IDA), the International Finance Corporation (IFC), and the
Multilateral Investment Guarantee Agency (MIGA).  The World Bank
provides loans to developing countries to help reduce poverty and
to finance investments that contribute to economic growth.

The International Bank for Reconstruction and Development (IBRD)
provides funding for creditworthy developing countries with
relatively high per capita income.  It also provides technical
assistance and policy advice.  IBRD raises the money through the
sale of AAA-rated bonds in international capital markets.  Loans
are made only to governments or to agencies that can obtain a
government guarantee.  The IBRD also provides partial risk or
partial credit guarantees (with a counter-guarantee from their
government) to private lenders on development projects.  The
interest rates are variable, set one half of a percentage point
above the Bank's average cost of borrowing, or LIBOR.  Repayment
is
usually over 12 to 15 years, including a grace period of three to
five years.  Opportunities for U.S. companies exist to supply
goods and services in connection with these loans.

The International Finance Corporation (IFC) is an affiliate of
the World Bank that provides project financing for private
investment in developing countries.  IFC offers long-term loans
and equity investments, as well as other financing services.  IFC
will generally invest up to 25% of the total project cost.  In
addition to project finance, IFC also provides legal and
technical assistance to private enterprises.  Unlike the IBRD and
IDA, the IFC does not require government guarantees.  U.S.
companies seeking direct investment funds should contact the IFC.

The Multilateral Investment Guarantee Agency (MIGA) was
established in April 1988 to help investors'overcome the problems
of political risk.  Investors' concerns about political risk has
the effect of slowing down the flow of foreign direct investment
that in turn slowed the creation of jobs, and the transfer of
modern technology.  MIGA's purpose is to promote the flow of
foreign direct investment commercial (political) risk and by
providing promotional and advisory services to help member
countries create an attractive investment climate.  U.S.
companies seeking investment guarantees should contact MIGA.

For further information and assistance contact the Commercial
Service Liaison Staff, Office of the U.S. Executive Director, the
World Bank, 1818 H Street NW, Washington DC 20433, USA. Tel (202)
458-0118 or 0120, Fax (202) 477-2967.

Financing for projects in Morocco comes primarily from the World
Bank and the African Development Bank (AFDB), the European
Investment Bank, the Kuwaiti Fund, the Saudi Fund and the Abu
Dhabi Fund.

Projects Scheduled for Financing by the World Bank

Infrastructure

Pilot Rural Infrastructure.   The objective of the
 project is to
provide satisfactory basic infrastructure services (water supply,
electricity and access roads) to the rural population in six
priority provinces.  Appraisal mission is tentatively scheduled
for June 1998.  US$20.0 (IBRD). -Ministry of Interior, Rabat,
Morocco. Tel: (212-7) 73-44-65 ; Fax: (212-7) 73-45-63, Contact:
Driss Guessab, Director of Rurales Affairs.

Water Supply/Sanitation

Water Resource Management.  The project will assist the
government in defining and implementing a comprehensive water
resource management strategy.  US$20.0 (IBRD). -Ministry of
Public Works, Administration de l'Hydraulique.  Tel: (212-7)
77-90-08 ; Fax: (212-7) 77-86-96.

Environment

Protected Areas Management.  The overall project objectives are
to establish a system of protected areas in Morocco and promote
sustainable conservation management with the participation of the
local population in the ecosystems in the project areas.  US$10.1
(IBRD).
-Administration des Eaux et Forets et de la Conservation des
Sols, Ministry of Agriculture, Cite Administrative, Rabat,
Morocco.  Tel (212-7) 76-44-46, Contact: Dr. Abderrahmane Hanan,
Directeur General de l'Administration.

Population, Health and Nutrition

Health Management.  The project will support the development and
implementation of new financing mechanisms, mainly health
insurance; support hospital management reforms; and improve the
quality of services provided through priority rehabilitation of
health infrastructure, training of relevant personnel and
maintenance programs. US$60.0 (IBRD).
-Ministry of Health, 335 Avenue Mohammed V, BP 812m Mechanar,
Rabat, Morocco, tel (212-7) 76-16-75, fax: (212-7) 76-38-95.

Social Sector

Social Fund.  The project will establish a fund to finance social
investments and promote local community participation.  Project
preparation is under way.  US$60.0 (IBRD).
-Consulting services and implementation agency is to be
determined.

Urban Development

Fes Rehabilitation.  The project will assist in the conservation
and rehabilitation of the Fes Medina by expanding the ongoing
conservation efforts, consolidating partnerships, empowering
inhabitants in the self-rehabilitation process, and using this
process to alleviate poverty.  US$15.5 (IBRD).
-ADER-FES, 4 Ave. Zaid Ibn Harita, Fes, Morocco, tel (212-5)
65-34-69; fax (212-5) 65-38-83.

Banks with Correspondent U.S. Banking

Among the leading commercial banks in Morocco, the following deal
with major U.S. correspondent banks:

BANQUE MAROCAINE DU COMMERCE EXTERIEUR
Bank of New York
Bank of America
Bankers Trust
Chase Manhattan
Chemical Bank
Citibank

BANQUE CENTRALE POPULAIRE
Arab Banking Corporation
Bank of New York
Bank of America
Chemical Bank
Citibank

BANQUE MAROCAINE POUR LE COMMERCE ET L'INDUSTRIE
American Express
Bank of New York
Citibank
First American Bank Inc.

BANQUE COMMERCIALE DU MAROC
American Express
Arab-American Bank of New York
Bank of New York
Chase Manhattan Bank
Chemical Bank
Citibank
First National Bank of Chicago
First Bank of America
National Bank for Cooperatives
State Street Bank & Trust Company

CITIBANK-MAGHREB
Citibank

CREDIT DU MAROC
American Express Bank
Bank of New York
Chemical Bank
Credit Lyonais of New York
USEXIM Export Credit Program

SOCIETE GENERALE MAROCAINE DE BANQUES
Chase Manhattan
Citibank
Societe Generale

WAFABANK
Arab Banking Corporation (ABC)
Bank of New York
Bank of America
Bankers Trust Co.
Chase Manhattan
Citibank
Continental Bank
Manufacturers Hanover Trust Co.
Ubaf