Morocco Unveils Credit Guarantee Program to Boost Struggling Hotel Industry

This new guarantee product called "Damane relance hôtellerie" is between 80% and 90% depending on the size of the company and is guaranteed to state-classified tourist accommodation companies. It could be increased to 95% for companies with a turnover exceeding 100 MDH. However, a series of strict eligibility criteria, contained in an annex accompanying this program contract, have been established. These companies must first meet the following criteria: be a Moroccan private law company, and operate a classified tourist accommodation establishment, as defined by law 80-14 and its implementing texts: hotel, hotel club, hotel residence, guest houses, etc.; obtain a ratio of "bank debt/gross operating surplus" less than or equal to 7.

They must also not be in receivership or judicial liquidation, have non-performing bank credit classified as "compromised" as of February 29, 2020 or have paid dividends during the year 2020. According to the program contract, Moroccan companies that meet these eligibility criteria are invited to submit their "Damane relance hôtellerie" credit application to their bank for the examination of their file, pending the decision to grant a credit line by the bank and the Caisse Centrale de Garantie (CCG).

As for the characteristics of the credit, it is set at 2 months of turnover, with a ceiling set at 100 million dirhams. These credits should be available no later than December 31, 2021 and repaid over a period not exceeding 10 years, including a maximum of 2 years of deferral, after the drawdown period. This credit should be used up to 20% for the payment of salaries and social security contributions, 30% for the payment of suppliers (subsidiaries and/or parent company of the beneficiary company excluded). In addition, they are prohibited from repaying shareholder debts or associated current accounts, or from paying management fees or carrying out upper-tier transactions (capital increase/reduction, share buybacks, etc.) and for amortizing the principal of loans taken out with banks.

The government hopes that domestic tourism, with this program contract, will finally take off to reach its 2019 performance as early as 2022. It will thus be able to recover more than 5 million tourists, 28 billion dirhams in foreign exchange travel receipts, and ensure the maintenance of at least 80% of stable jobs over the period 2020 - 2022. To recall, the estimated impact of this crisis for the year 2020 is -69% on tourist arrivals, -60% on foreign exchange receipts and about 50% loss of jobs compared to 2019.