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Moroccans protest pension reform

The country is under pressure from international leadesr to cut public spending and subsidies

Published: Updated:

Morocco's finance minister has insisted that a proposed pension reform would go ahead next year, while hundreds of public sector workers took to the streets of Rabat to oppose the plan and other government spending cuts.

The North African kingdom is under pressure from international lenders to cut public spending and subsidies, but
must balance reforms against the risk that austerity measures will stoke popular discontent and opposition protests.

As part of the pension reform, the Islamist-led government wants to increase the retirement age from 60, but has not said to what level, and expand the calculation base for pensions.

"The more time we take to start the reform, the more important the risks for the state budget," Finance Minister
Mohammad Boussaid told L'Economiste daily in an interview published on Thursday. "It is extremely important for the budget and for public workers."

The government estimates that without the proposed pension reform the deficit of the Moroccan Pension Fund (CMR) for public sector workers will increase from a forecast 1.28 billion dirhams ($151 million) in 2014 to 24.85 billion dirhams in 2021 and 45.66 billion dirhams in 2030.

With the pension reform, the CMR will eventually be balanced, the government says.

Boussaid told the newspaper that the government would start the pension overhaul in 2015 at a cost of 2 billion dirhams in the first year, and 5 billion dirhams in 2016 but did not say whether those costs would be borne by the government or public sector workers.

Two labour unions organised protests by several hundred workers from the public sector in downtown Rabat on Thursday.

The country's three largest labour unions said last week they would join forces to protest against cuts in pensions and
subsidies, but have not said what form of protests were planned.

Thursday's protest was organised by the two smaller unions, from the Istiqlal party, which left the ruling coalition last year, and from the leftists of the Democratic Path party.

The government plans more public spending cuts this year. It has already ended subsidies on gasoline and fuel oil and started to cut diesel subsidies significantly, after beginning to index them partially to world oil prices.

Morocco's budget deficit hit 7.3 percent of gross domestic product (GDP) in 2012. Last week, officials said the gap for
2013 narrowed to 5.4 percent and is expected to drop further to 4.9 percent of GDP in 2014.

($1 = 8.2880 Moroccan dirhams)