Lahcen Achy
The social package implemented by the Moroccan government in the first few months of the year has cast a shadow over the preparation of next year’s budget. The budget deficit is expected to be around 6 per cent of GDP by the end of the current fiscal year, a level unprecedented in the last decade.
The Moroccan government – in an attempt to preserve social peace and avoid any escalation in the protest movement sparked by the Arab Spring – increased civil servants’ wages by about $70 (Dh260) a month, announced plans to hire more than 4,000 unemployed college graduates and doubled subsidies to preserve the price stability of fuel and basic consumer goods whose prices have risen considerably on the world market.
The worsening of the budget deficit in Morocco comes at a time of scarce liquidity in local banks and public dissatisfaction with the privatisation process, which has played a key role in the country’s economy over the last few years by allowing the sale of public assets to keep pace with high public spending. The high interest rates on loans in international financial markets, due to the sovereign debt crisis and the repercussions of the Arab Spring, have seriously reduced the government’s margin for manoeuvre.
