RABAT: Morocco’s new moderate Islamist government is facing dire economic times, caught between rising prices, slowing growth, and a harsh drought that has badly affected farming.
The nation’s 33 million people also face high unemployment, a problem that has fanned social unrest, such as recent rioting in the northeastern town of Taza.Finance Minister Nizar Baraka warned that the country’s budget would have to be revised.France and Spain, whose economies are stagnating amid a spiralling debt crisis in the eurozone, are Morocco’s two main trade partners.Attracting foreign investment is also proving a challenge with both the EU and Gulf countries reducing exposure because of global economic uncertainty. Morocco’s public deficit last year reached 6.0 per cent of gross domestic product, a record brought on in part by growing subsidies, notably on food.A new government, headed by moderate Islamists, took over late last year, but it too is now struggling in the face of financial woes.“The government has been caught out by the size of the problem. Its euphoric (electoral) campaign gave rise to widespread expectations. Now, they have to pay the price,” economist Driss Benali said.The government is finding it has little room for manoeuvre.To dampen growing protests last year, the state nearly doubled its spending on subsidies with these accounting now for nearly 20 per cent of the government’s budget.And the drought has led to higher food prices, with oil prices expected soon to follow suit.Morocco has no oil, but is the world’s main phosphate producer.Tourism and money transfers from Moroccans abroad account for the two other high foreign currency earners.
Agence France-Presse
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