Starting in the late 1970s, Morocco experienced a serious economic crisis due to the heavy cost of the campaign to annex the Western Sahara, a fall in phosphate prices, an alarming balance of trade deficit, and an escalating foreign debt. In 1983, the King Hassan II agreed to an International Monetary Fund (IMF)-sponsored austerity program, which caused riots throughout the kingdom. After 15 years of intense economic restructuring, the aggregate outlook improved as privatization gained momentum and foreign investments increased. However, in 2001, Morocco's total external debt stood at US $19 billion, and the country struggled with rising unemployment, a series of severe droughts, and a generally poor performance in most sectors. The economic growth rate fell to 0.6% from 6.3% in 1998, mostly as a result of a severe drought, but good rainfall in 2001 turned the economic tide, and led to a growth rate of 5%. A significant increase in tourism during 2000 and early 2001 seemed to be just the boost for the economy that was needed to encourage the nation. But the decline in international tourism following the September 2001 terrorist attacks in the United States, and the subsequent initiation of the War on Terror by U.S. president George W. Bush, may reverse any progress made in Morocco's tourism industry.
Unemployment, estimated at 30% in 2002, has been on the rise in Morocco and there is still widespread poverty, with the gap between rich and poor Moroccans widening as gross income disparities across social classes and regions increased. The population continues to grow at a burdensome rate of slightly less than 2% a year, and the number of new job seekers continues to rise faster than job availability.
In the late 1990s, several strikes and demonstrations shook many professions and universities, calling attention to the urgency of dealing with the negative fallout from economic restructuring and inadequate public policies.
The young king is well aware of the potential dangers that an ever-expanding poverty may bring about. Mohamed has been playing a very active role in public affairs, becoming particularly concerned with social issues. In 1998, while only the crown prince, he initiated an antipoverty campaign, a 10-day series of events and activities during which Moroccans were invited to contribute to the Mohammed V solidarity fund. The campaign has become a yearly event with contributions earmarked for the construction of social welfare facilities and food distributions to the poor.
In 2001, Mohamed initiated a series of literacy programs held in local mosques as part of a two-year pilot to boost literacy, education and, eventually, employment. Opening the mosques for educational purposes has been seen as a daring move by insiders. King Hassan II had ordered mosques to be closed for purposes other than prayer, essentially blocking the use of mosques as meeting places for Islamic opposition. Critics fear that Islamic militants will seize control of mosque educational programs just as they have attacked universities in the past. And, since economic conditions have not improved much for most Moroccans, a militant Islamic tide or the military may, at an opportune time, forcefully challenge the throne.