4 February 2014

Morocco Offers Solution to Capital Flight

Casablanca — The Moroccan government will forgive those involved in capital flight if they pay a lump charge and transfer their overseas assets to banks back home.

Morocco's Financial Intelligence Handling Unit (UTRF) on Monday (February 3rd) outlined the procedures to implement the new policy, which was outlined as an amendment to the 2014 Finance Law.

"The goal of this initiative is to enable Moroccans involved in illegally getting money out of the country to resolve their cases with the authorities in a way that would save their face and encourage them to return the money to the country, so it can benefit from it," Economy and Finance Minister Mohamed Boussaid said.

"Morocco is more entitled than foreign countries to benefit from such money,' the minister added.

The government hopes that the measure will help alleviate the financial crisis in the country. The restored money will feed the country's foreign currency reserves, which have significantly deteriorated in recent years, dropping to a level equalling 4 months of imports.

In addition, income from charges imposed on this money will help cut the government budget deficit.

Boussaid said the plan would allow people to put up to 75% of their balances in hard currency accounts at Moroccan banks, by paying a charge of 5% of the total value.

But if "the beneficiary decides to transfer all his balances to dirham bank accounts, the charge will be 2% only of the value of these balances," Boussaid added.

"There won't be any administrative or judicial measures against those people, and their names won't be disclosed. We'll keep them the same privileges they were enjoying overseas," the minister explained.

As for anyone holding real estate or other moveable assets outside of Morocco, they will be able to resolve their cases by disclosing the property purchase price and paying 10% of the value.

They would also have to return the money upon selling the property, the minister said.

"As far as I'm concerned, if we manage to restore 5 billion dirham through this plan, we'll be deemed to have made a good achievement," he said.

The plan does not protect money launderers or criminals.

"I wouldn't call those people smugglers," he said. "Most of them did that to get around the strict exchange laws. Many of them are businesspeople engaged in exports and imports, and they got their money out by manipulating invoices."

Bank Al Maghreb governor Abdellatif Jouahri hailed the government's initiative, which came amidst the international move to establish greater transparency in financial transactions.

Democratic Workers' Federation (FDT) MP Larbi Habchi, however, called the measure "only a partial solution".

"The government was forced to opt for that measure because of the ramifications of crisis, especially the aggravating budget deficit, trade deficit, deteriorating currency reserves and bank liquidity, and decreasing tax revenues," he told Magharebia.

"What we need is a comprehensive, multi-faceted strategy to protect national capital by dealing with the real factors behind this phenomenon and combating bribery, rentier, smuggling, monopoly and tax evasion," the MP added.

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