2. In morocco, a unitary state with highly
centralized governance, a national lending
agency has dominated local government
borrowing. The country is working to decentralize its
governance and still developing its domestic
financial markets, which have had little experience
in lending to subnational governments. Morocco
relies on a municipal development fund, the
Communal Infrastructure Fund, as a vehicle for
ensuring access to credit for municipalities that are
too small and too heavily dependent on the
central government to tap credit market directly.
Deficiencies in financial management and
reporting by subnational governments hamper
their access to private credit, and centrally
provided credit has limitations.

3. Deficiencies of subnational
governments to access in
private credit are the main
problem in Morocco’s
economic situation.

4. 1. Deficiencies in financial management and
reporting by subnational governments
hamper their access to private credit.
2. Subnational governments’ lack of
autonomy in fiscal decision making coupled
with poor planning and operating
capabilities.
3. The inefficiency of asset management of
subnational governments.
4. The inadequacy of cost recovery practices
and their lack of differentiation between
revenue – generating services and public
goods.

5.  There should be a quality of fiscal and
financial management, the budgetary and
control systems, and the planning and
implementation of their investments
programs.
 To foster a more efficient subnational
finance system, the central government has
embarked on reforms to help expand the
bankable demand for private credit and to
increase the participation of private
financial institutions in subnational
investment funding.

6.  Information to prospective creditors about
the financial situation of subnational
borrowers, particularly their indebtedness –
whether direct liabilities or contingent
liabilities such as guarantees.
 Use financial intermediary like COMMUNAL
INFRASTRUCTURE FUND that can tap credit
markets on behalf of subnational borrowers
is one way to foster market access for small
and medium – size municipalities that still
cannot directly access Morocco’s long –
term credit markets.

7.  Strength
Private investors are encouraged to
lend to local government. Private
investors will give their full trust to local
government, because central
government will embarked on reforms to
help expand the bankable demand for
private credit and to increase the
participation of private financial
institutions in subnational investment
funding.

8.  Weakness
Morocco’s subnational governments
may encounter difficulties in
implementing budgetary
controls, financial management and
procedures to secure the investments of
private investors.

9.  Opportunities
A lot of private investors will
encourage lending capital to local
government. In pooling the credit
demand of subnational borrowers, the
fund could act as an intermediary or
bridge between subnational
governments and institutional investors.
Then a lot of infrastructure may establish
in Morocco.

10.  Threat
Some private investors are afraid to
lend its capital to subnational
governments. It is because they think
that investing to Morocco’s subnational
governments is too risky.

11. As shown in the alternative
solutions, we recommend that local and
central government must consider the
quality of fiscal and financial
management, the financial situation of
subnational governments, and use a
financial intermediary to pool private
investors.

12. Therefore, if Morocco’s local and central
government consider all possible solutions in
pooling private investors, a lot of private
investors are encouraged to lend to local
governments. As well, private investors will
give their full trust to local
government, because central government
will embarked on reforms to help expand
the bankable demand for private credit
and to increase the participation of private
financial institutions in subnational
investment funding.

13. Morocco, a unitary state with highly
centralized governance, a national lending
agency has dominated local government
borrowing . From the centralized governance it
was shifted to decentralization in order to tap
private undertakings by the subnational
borrowers and also to help uplift the status of life
of the small sectors within the country in terms of
employment, business, education, industry, agric
ulture and other necessities for survival
particularly the needs of the people of Morocco.
Through the financial intermediary so-called
Communal Infrastructure Fund , as a vehicle for
ensuring access to credit for municipalities that
are too small and too heavily dependent on the
central government to tap credit market directly,

14. it will serve as a middleman between those who
have capital surpluses like investors and to those
have capital deficits like the needing small sectors
,subnational borrowers or even the local
government. But the problem of Morocco was that
there are deficiencies in financial management
and reporting of subnational governments to
access in private credit , lack of autonomy in fiscal
decision making coupled with poor planning and
operating capabilities, inefficiency of asset
management of subnational governments and
inadequacy of cost recovery practices and their
lack of differentiation between revenue –
generating services and public goods. In supplying
solutions to these problems, we recommend that
local and central government must consider the

15. quality of fiscal and financial management, the
financial situation of subnational governments, and
use a financial intermediary to pool private
investors. If this may happen, there is more
potential private investors who will invest and that
the projects of the government will be put into
action to serve the people and as well as to
improve the economy of the country. Through the
income generated by its projects the investors will
be confident as to credit worthiness of the local
government.

16. 1. Hyacinth Quijano
2. Mel Joy Benigno
3. Nessie Divina