CCSRS Assembly: A resilient Moroccan monetary sector, however some reforms are pressing

The Systemic Threat Coordination and Monitoring Committee (CCSRS) met on Tuesday on the headquarters of Financial institution Al-Maghrib (BAM) in Rabat. This nineteenth assembly supplied a possibility to take inventory of the steadiness of the Moroccan monetary sector, marked by the resilience of the banking sector, reasonable development within the insurance coverage sector, and chronic challenges within the pension sector.

Throughout this assembly, the CCSRS famous that the Moroccan banking sector continued to show stable fundamentals in 2023. By way of profitability, the mixture results of banks recorded a rebound of 20.4% on the finish of the 12 months, after a contraction of 13% in 2022. This restoration is principally attributed to the efficiency of market operations, which contributed to this substantial development in income.

By way of solvency, Moroccan banks have posted stable ratios. On a social foundation, the common solvency ratio stands at 15.5% and the common Tier 1 capital ratio at 12.9%. These ranges are properly above the regulatory minima set at 12% and 9% respectively. On a consolidated foundation, these ratios stand at 13.5% for solvency and 11.6% for Tier 1 capital, thus demonstrating the robustness of the sector within the face of regulatory necessities.

As well as, the solvency macro-stress check train confirmed the resilience of the Moroccan banking sector within the face of situations simulating the deterioration of macroeconomic circumstances. The short-term liquidity ratio stays at a cushty degree, above the regulatory threshold of 100%, which reinforces the steadiness of the banking sector in unsure financial circumstances.

Monetary Markets, stable resilience

Regardless of rising rates of interest, the insurance coverage sector maintained its development in 2023, albeit at a slower tempo. The sector’s turnover confirmed a slight enhance of three.9%, reaching MAD 55.9 billion on the finish of the 12 months. This development was primarily pushed by the expansion of the non-life department, which elevated by 5.8%. Then again, development within the life department slowed down, recording a rise of only one.8%, in comparison with a mean of 11.9% during the last ten years. This slowdown is essentially resulting from a much less dynamic efficiency of the financial savings section.

By way of profitability, the insurance coverage sector generated a web accounting results of 4.2 billion dirhams, up 6.2%, thus bringing the return on fairness (ROE) fee to 9.6%. The ratio of unrealized capital good points on investments improved to 9.3%, in a context of restoration within the inventory market, which had a optimistic affect on the sector’s solvency margin, reaching 330.4%, in comparison with 312.7% a 12 months earlier. This margin stays properly above the regulatory threshold, even when it presently solely covers the underwriting danger.

The stress check workout routines carried out present an total resilience of insurance coverage firms within the face of unfavourable macroeconomic and technical circumstances, thus confirming the solidity of the sector.

Pensions: The urgency of reform

The CCSRS additionally addressed the persistent challenges within the pension sector, highlighting a tough monetary state of affairs for the principle primary schemes. The Civil Pension Scheme (CMR-RPC) and the Collective Retirement Allowance Scheme (RCAR) proceed to face main structural challenges. The current measures taken inside the framework of the social dialogue of 29 April 2024 have made it potential to barely postpone the horizons of depletion of reserves, however they don’t assure the long-term viability of those schemes.

For the final scheme of the Nationwide Social Safety Fund (CNSS), the discount of the minimal contribution interval from 3,240 to 1,320 days, which goals to extend the variety of beneficiaries, dangers accelerating the looks of an total deficit and the depletion of reserves. This measure, though bold, might additional weaken the system.

Confronted with these challenges, the CCSRS insisted on the urgency of implementing a systemic reform of the pension sector. The institution of a two-pole system, one public and the opposite non-public, has develop into important. This reform goals to ascertain a pricing system able to absorbing a considerable a part of previous commitments not coated by present schemes.

The proposed reform envisages the institution of two separate entities: a public pole, which might proceed to handle the pensions of civil servants and public sector staff, and a non-public pole, meant for personal sector employees. This bipolar construction ought to permit for extra environment friendly administration and a greater distribution of sources, whereas guaranteeing broader and extra equitable protection of beneficiaries.

The excellent non-public debt in Morocco stood at 262.9 billion dirhams on the finish of April 2024, recording a rise of three.54% in comparison with the identical interval the earlier 12 months. The web debt of non-financial issuers by means of public appeals for financial savings stays usually underneath management, with a degree of 53% of fairness for listed issuers and 80% for unlisted issuers.

The CCSRS welcomed the efforts made to finish the compliance of the nationwide system for combating cash laundering and terrorist financing with the suggestions of the Monetary Motion Job Power (FATF). This compliance was endorsed by the Center East and North Africa Monetary Motion Job Power (MENAFATF) at its plenary assembly held in Manama in Might 2024. This worldwide recognition strengthens the credibility and reliability of the Moroccan monetary system on the world stage.

In conclusion, the nineteenth CCSRS assembly supplied a optimistic evaluation of the resilience of the Moroccan monetary sector. The banking sector continues to show stable fundamentals, the insurance coverage sector maintains reasonable development, and structural reforms are wanted to make sure the long-term viability of the pension sector. The implementation of those reforms will likely be essential to make sure lasting stability and defend future generations.

Selim Benabdelkhalek