ECONOMY OVERVIEW
Moroccan economic policies brought macroeconomic stability to the country in the early 1990s but have not spurred growth sufficient to reduce unemployment that nears 20% in urban areas. Poverty has increased due to the volatile nature of GDP, Morocco's continued dependence on foreign energy, and its inability to promote the growth of small and medium size enterprises. However, GDP growth rebounded to 6.7% in 2006 due to high rainfall, which resulted in a strong second harvest. Despite structural adjustment programs supported by the IMF, the World Bank, and the Paris Club, the dirham is only fully convertible for current account transactions and Morocco's financial sector is rudimentary. Moroccan authorities understand that reducing poverty and providing jobs is key to domestic security and development. In 2004, Moroccan authorities instituted measures to boost foreign direct investment and trade by signing a free trade agreement with the US, which entered into force in January 2006, and sold government shares in the state telecommunications company and in the largest state-owned bank. Long-term challenges include preparing the economy for freer trade with the US and European Union, improving education and job prospects for Morocco's youth, and raising living standards, which the government hopes to achieve by increasing tourist arrivals and boosting competitiveness in textiles.