Morocco expects a budget deficit of 4 percent of GDP as forecast this year as it will cut costs to offset a soaring fuel subsidy bill resulting from higher oil prices, according to Economy and Finance Minister.
The north African kingdom’s fund to subsidise essential goods such as fuel and food is likely to soar to 23-24 billion dirhams ($2.61-2.73 billion) from 13 billion dirhams in 2009, Economy and Finance Minister Salaheddine Mezouar said in a speech in the Moroccan capital Rabat.
“In terms of the budget, things are proceeding normally,” he said. “We will … take measures in the second half to reduce the state’s cost base and remain confident of maintaining the deficit at around 4 percent, as we foresaw in the finance law.”
The government’s draft 2010 finance law published last October forecast a budget deficit of 4 percent of gross domestic product, compared with a deficit of 2.2 percent last year. Morocco’s government has stimulated the economy by cutting taxes and boosting state salaries and infrastructure investment to compensate for the global downturn. Two years of bumper grain harvests are also helping bolster domestic demand. Reuters reports
But an anaemic recovery in Western Europe, the chief market for Morocco’s exports, is complicating the country’s efforts to become a cheap manufacturing and services platform, create more long-term, skilled jobs and address widespread poverty. Mezouar said Morocco’s economic growth should exceed 4 percent this year compared to 4.9 percent in 2009. The government’s 2010 budget saw growth of 3.5 percent. Last year’s growth was boosted by a record grain harvest.
“Economic growth should be over 4 percent but thanks this time to an acceleration of growth in non-agricultural sectors that should reach 5 percent,” Mezouar said.
The growth estimate was similar to one given by Morocco’s state High Planning Commission on June 30, which put overall growth this year at 4 percent and non-farm growth at 5.9 percent, compared to 1.3 percent in 2009.
Mezouar said exports grew 12.4 percent in the first five months of the year, thanks mostly to a rebound in sales of phosphate products but also a limited pick-up in other export sectors that began at the end of 2009. (Editing by Susan Fenton)