Morocco Cuts Compensation Spending by 40%, Boosts Tax Refunds

Morocco has made significant adjustments to its fiscal spending in 2024, with a notable 40.1% drop in compensation-related expenditures by the end of November, totaling approximately MAD 14.42 billion (USD 1.35 billion)

Rabat – Morocco has made significant adjustments to its fiscal spending in 2024, with a notable 40.1% drop in compensation-related expenditures by the end of November, totaling approximately MAD 14.42 billion (USD 1.35 billion)

This reduction marks a shift in government priorities, Morocco’s General Treasury (TGR) has said, noting that these expenditures reached only 85% of the forecasted total for the year.

This decline in compensation spending is part of broader efforts to control the budget and ensure fiscal stability. While compensation costs have been slashed, other areas of government spending, such as wages and salaries, have seen an increase.

Salaries reached MAD 148.7 billion (USD 13.9 billion), an increase of 7.9%. This suggests that while overall compensation expenditures have decreased, public sector salaries continue to rise, potentially reflecting the government’s emphasis on maintaining workforce morale and public service efficiency.

In addition, government spending on materials increased by 5.7% to MAD 61 billion (USD 5.7 billion), indicating a focus on maintaining the supply of essential resources.

However, spending on common charges saw a drastic decline of 21.3%, dropping to MAD 31.9 billion (USD 3 billion). This could reflect efforts to streamline administrative costs or improve efficiency across public departments.

The general budget has also experienced a 49.5% rise in tax refunds, particularly corporate taxes and VAT reimbursements. Corporate tax refunds increased to MAD 2.15 billion (USD 201 million), up from MAD 1.33 billion (124 million), while VAT refunds rose sharply to MAD 12.45 billion (USD 1.16 billion), compared to MAD 8.31 billion (USD 776 million) the previous year.

This might suggest the government’s intention to support businesses by easing the tax burden, potentially to stimulate economic recovery and improve cash flow for companies.

Overall, Morocco’s fiscal adjustments demonstrate a balancing act between controlling public spending and providing targeted economic relief.