RABAT (Reuters) – Morocco’s fiscal deficit is expected to stabilize at 3.5 percent of GDP in 2020, according to a draft budget of the Moroccan government.
The estimate, which is close to Morocco’s goal of reaching 3 percent of debt in the medium term, is based on a forecast of privatization revenues of 3 billion dirhams ($ 313 million), according to the document seen by Reuters.
Other factors affecting the deficit in 2020 include the cost of raising public sector wages estimated at 6 billion dirhams and allocating 26 billion dirhams to boost the purchasing power of the poor, the document said.
The cost of subsidizing sugar, semolina and cooking gas will be reduced to 13.6 billion dirhams in 2020 from 18 billion this year.
The budget allocation for education will increase to 72.4 billion dirhams, while health allocations will jump to 18.6 billion dirhams. The budget places both items on the priority expenditure list.
Assuming an average of 7 million tonnes of cereal crop and a price of $ 67 per barrel, growth is expected to reach 3.7 percent in 2020 from 2.9 percent in 2019.
But Morocco’s central bank and the International Monetary Fund (IMF) say the economy will only grow 2.7 percent this year as grain yields fall due to a lack of rain.
The draft budget introduces tax incentives to encourage asset disclosure and foreign exchange remittances, which will help Moroccan banks suffering from a decline in deposits this year and strengthen the tax base in line with the government’s goal of boosting revenues.
The government plans to continue to pay VAT refunds to public and private companies by releasing 10 billion dirhams next year. Morocco’s business index rose to 60 in 2019 from 128 in 2019.
Public investment will increase to AED 198 billion in 2020, from AED 195 billion this year.