Morocco Maintains Fiscal Deficit Despite Increased Social Spending
In a significant announcement made on October 23, 2026, in Rabat, Morocco's newly appointed Finance and Economy Minister, Fouzi Lekjaa, indicated that the country is anticipating a steady fiscal deficit, projected to remain at 3% of GDP. This comes in the context of increased expenditure on social programs alongside planned tax reductions. While the economy is projected to grow by 3.7% in 2027, this reflects a decrease from an earlier forecast of 4.7% for the current year, highlighting the challenges the nation faces in achieving robust economic growth.
Minister Lekjaa presented these insights to parliamentary members while outlining the draft budget for 2027. The government recently established a new coalition following the elections on September 23, 2026, which emphasized the enhancement of purchasing power, expansion of social services, and the creation of job opportunities for the youth. These priorities come in the wake of significant public unrest driven by the younger generation's demands for better education and healthcare services, as well as the migration crisis experienced in Ceuta in July.
Strategic Investments in Social Services and Economic Reform
Reflecting on past economic policies, Lekjaa criticized the previous models that favored market forces over regulatory frameworks, which he claimed led to monopolistic behaviors and profit-driven practices detrimental to social equity. He pointed out that the existing issues of "savage capitalism and neo-liberalism" have contributed to social unrest and tensions, urging for a more proactive role for the state in the fight against corruption and monopolistic practices. This includes a commitment to ensuring food and energy sovereignty for the nation.
The government's proposed budget allocates a substantial 62 billion dirhams (approximately $6.3 billion) for initiatives aimed at bolstering social services, enhancing purchasing power, and addressing inequalities. Specific measures outlined include reforms to distribution channels for essential goods, incentives for youth employment, and income tax exemptions for salaries below 10,000 dirhams per month, which would benefit approximately 87% of the workforce. Additional provisions include pension increases, enhanced financial aid for low-income families, and subsidies for electricity.
The draft budget also anticipates a 7% increase in the health budget to 45.5 billion dirhams, while education funding is set to rise by 4.6% to 121 billion dirhams. Furthermore, the budget authorizes defense spending commitments amounting to 190.5 billion dirhams. Public debt is projected to decrease slightly to 66.9% of GDP by 2027, down from 67.5% this year, indicating a cautious approach to fiscal management.
In terms of taxation, the government plans to impose a 40% tax rate on profits exceeding 100 million dirhams for fuel distribution companies, an industry that has faced scrutiny from competition authorities for anti-competitive practices. Additionally, increases in excise taxes on soft drinks, alcoholic beverages, cigarettes, and e-cigarettes have also been proposed.
The financing requirement for the government is expected to decrease by 7.4% to 159 billion dirhams in 2027, as it aims to balance domestic and external borrowing in response to market conditions. This strategic approach is designed to sustain Morocco’s economic stability while addressing the pressing social needs of its populace.
As reported by reuters.com.
