Committee for the Abolition of Illegitimate Debt

Most Honourable Prime Minister,

I have listened with great interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. to your reply to the question concerning “The management of public policy in the domain of foreign debt and its impact on investment and the challenges of regionalisation”, [1] that arose during the public debate held in the Chamber of Councillors (the Senate) on 19 July 2016. At ATTAC1 Morocco we are extremely interested in this subject as members of the Committee for the Abolition of IllegiTiMate Debt (CADTM). Our international network seeks the immediate and unconditional abolition of illegitimate debts in the developing countries as well as in the developed countries, along with odious debts. One of the CADTM’s objectives is to get States to abandon structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

IMF : http://www.worldbank.org/ programmes (SAP).

First of all I would like to thank you for your frankness. It was the first time that a government official publicly recognised that Morocco is subjected to conditionalities imposed by the IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org in return for access to funds. This acknowledgement confirms what we have been denouncing for many years; the loss of national sovereignty. Your declaration in the 2^nd Chamber of the Moroccan Parliament contradicts your Finance Minister who continually affirms that Morocco has not agreed to any IMF conditionalities. The governor of the Moroccan central bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England.

ECB : http://www.bankofengland.co.uk/Pages/home.aspx (Al-Maghrib Bank) also assures that there are “no conditionalities at all” even though these two representatives signed the the “Letter of Intent” to the IMF, that engages Morocco concerning the Precautionary and Liquidity Liquidity The facility with which a financial instrument can be bought or sold without a significant change in price. Line [2]».

Mr. Prime Minister,

Your reply on this subject contained much untruth wrapped up in demagogy. It is sad to see how your continual exposure to the advice of the IMF and your faith in capitalism and its pillars (macro-economic stability, the free market, free trade and the privatisation of public services) cloud your perception.
Please allow me to present the case for some different, alternative responses concerning the Moroccan public debt. These responses will contradict what you generally hear from the IMF experts, from other international financial institutions and even from the Finance Ministry experts.

Is debt a natural choice?

“The State treasury is like that of a family, its spending is always more than its income. So, as in the family, State debt is not a problem”. It is in these simplistic terms that the head of government seeks to reassure the Moroccan people about the continual increase in Moroccan debt.

Leaving aside the fact that State and family finances are in no way comparable, to say that they are both natural is either dishonest or ignorant of economics.
For as long as the State does not guarantee decent incomes and comprehensive public and social services of high quality, Moroccan households will necessarily take on massive debt. Personal debt finances access to basic services and sometimes families’ basic needs. That households turn to micro-credit services to cover necessities is clear evidence of their dependence on borrowing. Look at the numerous Moroccan women in the south and east of the country who have to support this burden of household debt.

Public debt is an instrument used by creditors to appropriate the resources of many countries and to influence their political and economic policies in the development of a new form of colonialism. In most southern countries the sums paid out in servicing the public debt are far greater than those spent on health, education, rural development and job creation.

For example, the 2016 prevision for debt-servicing by the Moroccan treasury amounts to 69 billion dirhams, that is, 17% of previewed overall State spending. This amount is the equivalent of one and a half times the budget for education, five times the budget for health, one hundred times the budget for culture and one hundred times the amount allotted to improving the condition of women, family, assistance, social development and solidarity. In real terms, when a State devotes so much of its budget resources to repay debts taken on in the 1980s and 90s, all possibility of economic and social development is sacrificed.

“Morocco is a good credit risk”

You are proud, and perhaps naïve when you announce, before the Members of Parliament, that “Morocco has an excellent reputation in the banks and financial institutions, we always repay”. Yet despite being the head of executive power, you omit to mention that Morocco went so far as to repay the French coloniser who borrowed massively in the name of our ancestors and that after the coloniser left, the Moroccan people continued to repay this debt into the 1990s. It is to be remembered that French and Spanish colonialists got their first footholds by creating debt traps.

Mr. Prime Minister, I could have shared your pride if you had taken the trouble to establish an audit of the debts incurred by Morocco during The Years of Lead. [3] I would have liked to know what happened to the money that was allotted to the urgent reform programme for Moroccan schools? Rather than use your privileges, you have preferred to shed crocodile tears.

“Debt is a political choice”

“The state chooses indebtedness to finance investment, this is a political choice”, is how you justify the rapidly increasing debt. This is quite correct: indebtedness is a political choice, it serves the interests of the dominant classes. Rather than introduce radical fiscal reform and an overhaul of the current economic system, you prefer to finance the budget deficit by borrowing, and at the same time reducing investment in the social sector. This is an easy way out that endangers the well-being of future generations.

“You think big projects are free? You are going to pay!”

With your usual Prime Ministerial elegance [4] you pour disrespect and insults over the Moroccan people. You come to Parliament to tell us that big projects do not just appear like manna from heaven. The Noor solar station, [5] the TGV (high speed train), the motorways and the rest are financed by borrowing and we are going to pay for decades to come. What a discovery Mr. Prime Minister! The Moroccan people do not need anybody to tell them this news. The first and the last to finance these projects is the Moroccan people, who will be paying the debts and the privatisations of public services. These projects have been swallowing the State’s budgets for the last fifteen years; they have taken priority over social projects. And now you want to give us lessons on this, ah, c’mon!

Concerning the supposed beneficial effects of these projects on the economy and the attractiveness of the country, permit me to doubt that these prophesies be realised. Take the case of the TGV line between Tangier and Kénitra. [6] This project will cost Moroccans more than 25 billion DH, financed entirely by foreign and domestic borrowing. It is synonymous with two things: Morocco’s absolutism and nepotism, two plagues that your electoral programme claimed that you wished to rid the country of. The political absolutism is rampant here, the project was decided without consultation in the framework of a political deal with France at the time of the Sarkozy presidency. [7]

The TGV loans and donations came with conditions. France offered low-interest loans in order to win the contract. The Moroccan TGV will be delivered, without public calls for tender, for an all-inclusive price including maintenance. This is adding insult to injury, Mr. Prime Minister: Morocco has borrowed colossal sums of money to finance a project— or rather, a white elephant – that has a limited social impact on the population while at the same time public funds are transferred, in the form of contracts and debt repayments, to local and foreign capitalists.
For all these reasons, ATTAC Morocco, a member of the CADTM network, considers that indebtedness is neither a fatality nor a technicality. Public debt (foreign and domestic) generates massive transfers of wealth from the peoples of the South towards the lenders, while the local elites take their commission en passant. As much in the North as in the South of the planet, debt is a mechanism that transfers wealth created by the workers and small producers towards national and foreign capitalists.

The debt trap is once again closing in on Morocco. (The public debt is 82% of PIB). This infernal cycle of debt is one of the means by which the burden of social reform is passed from one class to another; yet this debt is economically and socially unsustainable. [8]

Finally, I regret to say that over the four years of your term of office you have ardently defended this transfer which spearheads the offensive against the popular classes.

Yours faithfully

PS: We would have liked to invite you to attend one of our events around the theme of debt, but your honourable Minister of the Interior (an important member of your government) continues to prohibit these activities and to harass our organisers. So we invite you to consult the website of the association and the CADTM network (www.cadtm.org) where you will find a new perspective on this subject.

Translated by Mike Krolikowski and Vicki Briault