Moroccan parliament approved the budget for current fiscal year in which it aimed to reduce budget deficit to below five per cent of GDP, and raise taxes on companies and alcohol products. The Moroccan News Agency said Prime Minister Abdelilah Benkirane’s government intends to narrow the gap between rich and poor Moroccans, and address issues like high unemployment and inflation.
Out of a total 230 MPs who attended the budget session, 166 voted in favour of the bill.
Earlier, Moroccan Finance Minister Nizar Barak mentioned in his budget speech that the new budget has three major objectives: to increase economic growth; to increase public investment; and to establish good governance and improve the business climate. He did not rule out the possibility of asking assistance from regional and international financial institutions in order to plug budget deficit and meet government’s expenditures.
The government has earmarked around 346.8 billion dirhams ($40.86 billion) for budget expenditures. Estimates suggest revenues will hover around 314.5 billion dirhams ($37.06bn), while budget deficit is expected to be more than 32.3 billion dirhams ($3.81bn). The finance minister said the government aims to reduce budget deficit to 5% of GDP after it peaked at 6.1% last year, the highest level since the 1990s.
Poor rainfall and bad agricultural prospects this year forced the government to revise its economic growth forecast. Growth is expected to decline to 4.2%, down from last year’s 4.9%.
Inflation is expected to increase by 2.5% after standing at 0.9% last year as Rabat has been asked by the IMF to curtail government subsidies, particularly on electricity, gas and petroleum.
Total public investment in the 2012 budget is set at 60 billion dirhams ($7.07bn), 25% higher than 2011 allocation, while military expenditures will reach around 52.6 billion dirhams ($6.20bn).
IMF has already issued a modest forecast of the Moroccon economy, suggesting growth may only reach 3.6% in 2012 due to various factors including drought, high oil prices, rising wheat exports, and eurozone economic crisis.