Historic Political Shift in Morocco
In a landmark decision for Morocco, King Mohammed VI has appointed Fatima Zahra Mansouri as the country's first female Prime Minister, following the significant victory of the Authenticity and Modernity Party (PAM) in the recent legislative elections. The royal palace announced this pivotal appointment in a statement, indicating that the king welcomed Mansouri in the capital city of Rabat and entrusted her with the responsibility of forming a new government. This decision aligns with Article 47 of the Moroccan Constitution, which mandates the Prime Minister to be appointed from the party that secures the most seats in the legislative elections, paving the way for Mansouri to initiate negotiations for forming a coalition with other political parties.
Election Results and New Government Challenges
The PAM party, which advocates for modernity and democracy, secured 97 seats, accounting for 25% of the total 395 parliamentary seats. The National Rally of Independents (RNI) followed in second place with 66 seats, while the Istiqlal party came in third with 65 seats. These three parties previously formed the outgoing government coalition, led by Aziz Akhannouch of the RNI, who acknowledged the victory of his ally. Born in Marrakech in 1976, Mansouri has previously served as the mayor of the city and as Minister of National Planning, Urban Development, Housing, and City Policy since 2021. She holds a degree in Anglo-Saxon law from Pace University in the United States, a postgraduate diploma in business contract law from Montpellier University in France, and a bachelor’s degree in private law from Mohammed V University in Rabat.
Mansouri, a lawyer specializing in real estate law since 2005, began her political career by joining the "Movement for All Democrats" in 2007 and was a founding member of the PAM in 2008, being elected as a parliamentarian twice. The new government, under the leadership of the first woman in this role in Moroccan history, faces numerous economic challenges. Unemployment remains a critical issue, particularly among the youth, with the unemployment rate reaching 13% in 2025 – the highest in two decades – before declining to below 10% this year, according to the International Monetary Fund (IMF). The IMF suggests that Morocco must create sustainable jobs by expanding the private sector and implementing labor market reforms.
Moreover, the challenges extend beyond job creation to the economy's capacity to generate employment opportunities outside the primary agricultural sector. Job growth in industry, construction, and services has partially offset losses in agriculture, which has suffered from consecutive years of drought. This necessitates diversifying employment sources and enhancing economic productivity as primary concerns for the upcoming government. François Conradi, Chief Political Economist at Oxford Economics, emphasizes that the election campaign highlighted politicians' awareness of Moroccans' expectations from the new government, particularly regarding job creation and measures to improve living standards. He notes that while any government is judged on its ability to create jobs, achieving this remains complex, particularly when the government simultaneously seeks to raise general wage levels.
To address these economic challenges, enhancing the private sector's role in job creation and investment is crucial, especially given the persistent unemployment despite improved growth rates. The kingdom needs to transition from government-led growth to a model that allows private companies a more significant role in investment, production, and job creation. Conradi highlights that effective action lies in supporting the private sector by addressing bureaucratic inefficiencies, which can contribute to job creation, even if it does not necessarily lead to immediate wage increases. Additionally, private sector demands include reducing customs wait times, expediting VAT refunds, and ensuring timely payments to suppliers, as previously recommended by the IMF in a report urging the Moroccan authorities to tackle obstacles hindering private investment to bolster growth.
Looking forward, Morocco's economic growth is expected to slow next year, with the central bank reducing its GDP growth forecast for this year from 5.2% to 4.4% and from 3.1% to 2.9% for the following year. This slowdown is attributed to a recovery in agricultural value-added activities due to a rainy season that ended prolonged droughts, contrasted by a slowdown in the industrial and services sectors linked to global conditions. Rashid Oraz, a senior researcher at the Moroccan Policy Analysis Institute (MIPA), notes that while the anticipated growth rate for the Moroccan economy this year appears positive, it does not negate the significant challenges ahead, including rising unemployment and increasing debt in light of commitments related to infrastructure investments, particularly in preparation for hosting the 2030 FIFA World Cup.
Oraz points out that youth unemployment, especially among those aged 15 to 24, nears 27%, with female unemployment at about 15% and 16.7% among those with higher education credentials. These figures reveal that the overall decrease in unemployment does not necessarily reflect transformations within the labor market, as high unemployment persists among social groups capable of exerting social pressure, posing a challenge for the new government. Furthermore, the expansion of the informal sector represents another challenge, providing employment for a significant portion of the workforce but often associated with precarious jobs and unfavorable working conditions, along with limited value addition and contributions to government revenues. The informal sector is estimated to account for approximately 30% of GDP in Morocco, one of the highest rates globally, and the government aims to facilitate the transition of workers and enterprises from the informal economy to the formal one by simplifying procedures, reducing administrative and tax burdens, and enhancing access to financing and government contracts for micro and small enterprises.
Oraz asserts that the persistence of this large informal sector reflects structural issues within the Moroccan economy, raising questions about past reforms and the success of relying on government investment to drive economic reform towards a more productive model capable of delivering sustainable growth and decent job opportunities. Additionally, the government is under increasing pressure on public finances, as substantial financial resources are needed for infrastructure investments and World Cup projects, alongside the necessity of funding social protection initiatives. The government's debt is projected to reach 1.145 trillion dirhams by the end of 2025, equivalent to 66.6% of GDP, while total public debt exceeds 76% of GDP. These levels impose a burden on public finances and limit the state's ability to expand social spending and investment.
Fitch Ratings recently warned that Morocco's infrastructure program in preparation for hosting the 2030 World Cup poses potential risks to public finances, despite the majority of investments being executed off-budget. The IMF estimates the infrastructure investment program for hosting the World Cup at around 190 billion dirhams (approximately $20 billion) from 2024 to 2030, representing about 11.9% of the country's GDP. This global sporting event will be co-hosted with Spain and Portugal. Oraz emphasizes that the shrinking financial margins present the government with a challenging equation, especially amid electoral promises to reduce taxes and improve wages, which require additional resources at a time when public finances' capacity to bear new burdens remains limited. Alongside employment and public finance, Oraz highlights education, health, and anti-corruption as key economic priorities for the new government.
As reported by asharqbusiness.com.
