Morocco's Public Finances: a tense situation
The Moroccan economy is no longer as resilient in the face of the global economic crisis and is showing signs of increasing weakness.
Source : https://www.marocafrik.com/english/Morocco-s-Publi...
2012 is a difficult as the recession and crisis continues particularly in the Eurozone which is still Morocco's main market for exports and revenues from tourism and remittances from Moroccans living abroad are well down, L'Economiste reports.
Low rain fall and a cold snap have resulted in a lower crop down nearly 50 per cent from last year forcing the government to import more wheat and sugar leading to a widening deficit to 6 per cent reflecting the heavy cost of subsidies.
Originally 46 billion dirhams, the cost of subsidies could reach nearly 81 billion dirhams unless action is taken by the end of 2012 according to Professor Mohamed Berrada a former minister of finance .
"The financing gap would be 35 billion that would flow into arrears," he predicts.Despite the fuel price increase the target of 32 billion for the compenstion fund will be missed.
The government has to find other revenue sources to reduce the deficit whilst targetting aid for the poor in the community who are suffering the most from the higher costs of living.
The stimulus for growth should come from higher capital spending but this is no longer possible.because of the delay in investment committments. To cut spending and raise taxes will impede growth.This is exactly the same problem facing the Eurozone.
Tthe external account deficit. shows that the foreign trade balance may be as much as 48.2 per cent by the end of April.
The trade deficit (49 billion DH) has reached 8 per cent of GDP. The value of imports (123 billion DH) is more than double that of exports (60 billion dirhams).
The previous governments industrialisation efforts included Renault and the Tangiers Med Freezone,Nouaceur and the aviation manufacturing hub and the call centres and IT Free Zones in Casablanca and Rabat, however Morocco is still only exporting half of what it imports.
To develop a manufacturing economy and an IT based industry does take time. Agriculture,subject to rains and often the victim of drought remains vital to the Moroccan economy.
Crop failures add to the cost of importing food items as well as consumer goods.The competitivity of Morocco's economy is also seriously compromised .
Current account transfers and foreign investments which have long contributed to finance the trade gap have been reduced to a trickle due to the sluggish international economy.
The consequence is that the current account deficit of balance of payments has turned negative, at about 4% resulting in a lower level of foreign reserves in at just over 4 months of imports. A threshold that is currently in reasonable limits. Morocco's foreign currency reserves are now bellow 20 billion dollars according to the latest IMF figures.
Low rain fall and a cold snap have resulted in a lower crop down nearly 50 per cent from last year forcing the government to import more wheat and sugar leading to a widening deficit to 6 per cent reflecting the heavy cost of subsidies.
Originally 46 billion dirhams, the cost of subsidies could reach nearly 81 billion dirhams unless action is taken by the end of 2012 according to Professor Mohamed Berrada a former minister of finance .
"The financing gap would be 35 billion that would flow into arrears," he predicts.Despite the fuel price increase the target of 32 billion for the compenstion fund will be missed.
The government has to find other revenue sources to reduce the deficit whilst targetting aid for the poor in the community who are suffering the most from the higher costs of living.
The stimulus for growth should come from higher capital spending but this is no longer possible.because of the delay in investment committments. To cut spending and raise taxes will impede growth.This is exactly the same problem facing the Eurozone.
Tthe external account deficit. shows that the foreign trade balance may be as much as 48.2 per cent by the end of April.
The trade deficit (49 billion DH) has reached 8 per cent of GDP. The value of imports (123 billion DH) is more than double that of exports (60 billion dirhams).
The previous governments industrialisation efforts included Renault and the Tangiers Med Freezone,Nouaceur and the aviation manufacturing hub and the call centres and IT Free Zones in Casablanca and Rabat, however Morocco is still only exporting half of what it imports.
To develop a manufacturing economy and an IT based industry does take time. Agriculture,subject to rains and often the victim of drought remains vital to the Moroccan economy.
Crop failures add to the cost of importing food items as well as consumer goods.The competitivity of Morocco's economy is also seriously compromised .
Current account transfers and foreign investments which have long contributed to finance the trade gap have been reduced to a trickle due to the sluggish international economy.
The consequence is that the current account deficit of balance of payments has turned negative, at about 4% resulting in a lower level of foreign reserves in at just over 4 months of imports. A threshold that is currently in reasonable limits. Morocco's foreign currency reserves are now bellow 20 billion dollars according to the latest IMF figures.
Source : https://www.marocafrik.com/english/Morocco-s-Publi...