While Morocco’s growth is lower and its deficit higher than was projected in the 2019 Finance Bill, the country is on trend for increased growth and lower deficits.
Frankfurt – Morocco’s gross domestic product (GDP) is set to grow 2.9% in 2019, Minister of Economy Mohamed Benchaaboun told the cabinet on Tuesday, October 8. The 2019 Finance Bill, enacted in November 2018, projected a growth rate of 3.2%.
Benchaaboun noted that healthy domestic demand has supported the growth of the economy. Overall non-agricultural production is set to have grown significantly more than it did in 2018, at 3.3% growth compared to 2.6% growth.
The World Bank also predicts growth of 2.9% in Morocco’s economy in 2019. Morocco’s GDP has not grown as fast as it did last year (3%) or in 2017 (4.1%). However, the International Monetary Fund, which projected 2019 growth at 3.2%, expects the growth rate to increase to 4.5% by 2024.
Budget deficit higher than hoped
After the cabinet meeting, Government Spokesperson Mustapha El Khalfi spoke in a press conference on Benchaaboun’s report, including his predictions on the government budget deficit in 2019.
The 2019 Finance Bill set a budget of MAD 443 billion, which the government expected to be higher than its revenue. Benchaaboun gave the figures in a presentation on his plans for the 2020 Finance Bill.
While the 2019 Finance Bill anticipated a government budget deficit of 3.3%, Benchaaboun said the deficit will actually reach 3.5%. The rate of overspending is still lower than it was in 2018. The 2018 deficit was 3.7%.
Apart from 2017, when the deficit was also 3.5%, the 2019 deficit will be the lowest deficit the Moroccan government has carried since 2009.
High cost of social programs
The GDP growth rate and budget deficit may seem disappointing, especially considering the 2019 Finance Bill’s aspirations. Benchaaboun, however, noted that Morocco kept the deficit under control despite the high cost of social programs.
Earlier in the year, the government made a “social dialogue” agreement with civil servants after strike. The agreement will cost MAD 14 billion. Of this significant sum, 6 billion will be spent this year.
Out of its MAD 443 billion budget, the government will spend MAD 18 billion on its traditional subsidies of sugar, butane gas, and flour. An increase in the price of butane gas contributed to higher subsidy fund spending.
The government has also spent increased amounts on the Tayssir program that helps rural families send their children to school, more university scholarships, improvements to the Medical Assistance Program (RAMED), and other programs for widows and people with disabilities.
This year, the government implemented the third phase of the National Initiative for Human Development (INDH), a five-year phase that is set to cost MAD 18 billion. Phase III of the initiative will focus on four programs: Reducing unequal distribution of infrastructure and basic services, supporting the vulnerable, economically integrating young people, and investing in education.
Benchaaboun also noted the MAD 3.6 billion the government spent on the Advanced Regionalization Project and other funding for the Anti Spatial Disparities Program.
In addition to social program spending, the government spent a large portion of the budget on paying its arrears to companies.
Benchaaboun said the government “decided to make 2019 the year of the settlement of State arrears’ repayment in respect of VAT. The government repaid companies approximately MAD 40 billion.