World Bank approves US$500m loan to support human capital in Morocco

The combination of the COVID-19 pandemic and a two-year drought pushed the Moroccan Economy into a deep recession in 2020 and led to an increase in poverty.


World Bank | Washington DC | Updated: 17-06-2022 11:23 IST | Created: 17-06-2022 11:23 IST
World Bank approves US$500m loan to support human capital in Morocco
Representative image Image Credit: ANI

The World Bank Board of Executive directors today approved a US$500 million loan aimed at improving protection against health risks, human capital losses during childhood, poverty in old age, and climate change risks. This is the first in a series of three operations that support a government reform program that is also financed in parallel by other development partners.

The combination of the COVID-19 pandemic and a two-year drought pushed the Moroccan Economy into a deep recession in 2020 and led to an increase in poverty. Morocco is gradually rebounding from this crisis, and a solid growth rate was registered in 2021. However, an unusually dry beginning of the agricultural season and the impact of the war in Ukraine on prices have put further pressure on the poor and vulnerable. The Strengthening Human Capital for a Resilient Morocco Development Policy Financing (DPF) seeks to reinforce the health system by expanding and deepening health insurance, especially for the poor and vulnerable; increasing the availability of health workers; and adapting health services to better respond to health risks from climate change. With a focus on climate-vulnerable populations, this financing will also gradually universalize a system of adaptive family allowances for children, expand pension coverage, and improve protection against extreme climate events.

"Moroccans have contended with many shocks these past few years, including a global pandemic, climate change, inflation and droughts. This program will support Morocco in universalizing health insurance, rolling-out a vital family allowance program, and better protecting the population from risks, including those caused by climate change, said Jesko Hentschel, World Bank Maghreb Country Director.

The program is built around three areas. The first aims to help protect Moroccans, particularly climate-vulnerable populations, against health risks with a focus on those caused by climate change. "This includes expanding coverage of the Mandatory Health Insurance regime (Assurance maladie obligatoire, AMO) to approximately 11 million people and their dependents and supporting improving the targeting of the Medical Assistance Scheme (RAMED)," said Jorge A. Coarasa, World Bank Senior Economist and Task Team Leader.

Second, this financing will also support the harmonization of all social protection schemes focused on children into an integrated program of family allowances and expanding its coverage, improving the targeting of family allowances and other schemes through a unified social registry and implementing a new pension regime for non-salaried workers. "Transforming a series of fragmented programs into a climate-smart, adaptive social protection system will help protect human capital development during childhood and better protect against the risk of poverty in old age," said Mahdi Barouni, World Bank Senior Economist and co-Task Team Leader.

The third aspect will support the government in strengthening the institutional and coordination framework for disaster and climate-related risk management; the development of new mechanisms to protect vulnerable farmers against droughts and other extreme climate events; and provision of relief for the effects of the delay of rainfall during the 2021-2022 agricultural season.

"Climate change poses many challenges to Morocco. The country is already in a situation of structural water stress, and rainfall levels have been increasingly erratic in recent years. It will continue to face climate-induced shocks like droughts, floods, and heat waves, which pose a particular risk to women, youth and rural populations. This new financing will contribute to increase Morocco´s climate resilience," said Javier Diaz Cassou, World Bank Senior Economist and co-Task Team Leader.

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