The budget deficit is due to the consequences of the COVID-19 crisis on Morocco’s economy.
Rabat- Morocco’s Ministry of Finance announced a budget deficit of MAD 82.4 billion ($9.23 billion) by the end of December 2020. The deficit amounts to 7.6% of the country’s GDP.
The ministry disclosed these figures in its report on “The Treasury’s Expenses and Resources,” published on Sunday. Budget deficit refers to the difference between the country’s overall public spending and revenue when the former exceeds the latter.
Morocco’s economy “suffered an unprecedented shock as a result of the preventive measures and restrictions taken to contain the spread of the pandemic, which led to an abrupt halt in economic activity,” explained the report.
The deficit occurred “despite a number of constraints and contingencies and in compliance with the State’s commitments to support the social and economic sectors and post-covid recovery,” it added.
During the same period last year, the budget deficit was maintained at MAD 46.7 billion ($5.23 billion), meaning 3.7% of Morocco’s GDP in 2019.
On the other hand, tax revenues generated a capital gain of MAD 13 million ($1.45 million), which helped offset the capital losses recorded in non-tax revenues.
The capital losses were also partially balanced by the improvement of “grants and donations funds” (+5.6 MAD million) and “miscellaneous income” (+4.3 MAD million).
Public expenses were mainly dictated by the COVID-19 crisis, which led to significant changes in state budget allocations.
Ordinary expenses, including the payroll of civil servants, the purchases of public institutions, and the reimbursement of public debts, were contained at MAD 231.9 million ($25,9 million).
The budget for ordinary expenses did not exceed the ministry’s forecasts. This is due to state savings on “goods and services and debt interest,” according to the report.
Meanwhile, the budget allocated for investments reached an MAD 85.9 million ($9.62 million), representing an increase of 18.8% compared to 2019. This amount covers, in addition to the traditional investments of the state, the planned allocation of MAD 15 million ($1.68 million) to the Strategic Investment Fund.
The fund seeks to boost investment and revive Morocco’s economy. By injecting money in Morocco’s badly hit sectors, the Strategic Investment Fund will focus on a set of sectors including industry and innovation. It will also support small and medium-sized enterprises, infrastructure, agriculture, and tourism.
Morocco allocated a budget of MAD 32 billion ($3.2 billion) for the fight against COVID-19 and its repercussions on the country’s economy. The fund supported primarily the health sector in order to purchase necessary medical equipment. The budget also supported low-income households, employees who temporarily lost their jobs, and provided informal sector workers with a stipend.