Morocco’s budget deficit falls to lowest since before protests
Morocco's government expects its deficit to fall further to 4.9 percent of economic output in 2014
Morocco's budget deficit fell to 5.4 percent of gross domestic product in 2013, the Finance Ministry said on Thursday, its lowest level since before the Arab uprisings that toppled other leaders in the region.
In 2010, the deficit was 4 percent but the government spent more on subsidies, creating jobs and boosting public sector salaries to stifle the potential for the mass protests seen in Egypt, Tunisia, Libya in 2011, pushing it to 7.3 percent in 2012.
Moroccans did take to the streets, calling for a fully elected government in the kingdom, but not in the numbers seen elsewhere and the demonstrations were mostly quelled by limited constitutional reforms, early elections and tough policing.
The government started to cut subsidies last year by partially indexing energy prices to global prices, but is under pressure from lenders such as the IMF to repair its public finances further after the protests, the impact of the euro zone crisis and drought.
However, it must also balance growth and social stability in the kingdom, where people are accustomed to heavy public spending and cutting too far too fast could trigger more unrest.
Morocco's government expects its deficit to fall further to 4.9 percent of economic output in 2014.
Last week, the government said it also ended subsidies on gasoline and fuel oil and started to cut diesel subsidies significantly as part of its drive to repair the public finances.
However, subsidies next year would still total 35 billion dirhams ($4.27 billion), down from 42 billion in 2013, according the 2014 national budget.
The government cut its 2013 public investment spending by 25 billion dirhams ($3.02 billion) to keep the deficit close to 5.5 percent of economic output as promised to international lenders.
The Finance Ministry said the public debt increased slightly to 62.5 percent of GDP in 2013 from 59.6 percent in 2012 and sees foreign reserves at 150.3 billion dirhams or 4.1 months of import needs. The trade deficit narrowed by 2.8 percent in 2013 compared with 2012.
The statement said the government maintained its 4 percent forecast for the growth in 2014, which would allow keeping the unemployment rate at 9 percent, although the state planning agency expects the economy to slow to 2.4 percent.
The state planning agency, which is an independent institution from the Islamist-led government, said on Wednesday the budget deficit was at 6 percent of GDP in 2013, while the economy grew at 4.4 percent.
It added the public debt was at 63.5 percent of GDP in 2013 and would reach 67.5 percent in 2014 as the government borrowed heavily to plug the budget deficit. It was not immediately clear where the figures were different from the government's.
($1 = 8.2016 Moroccan dirhams)