A budget deficit of 6.7% expected in 2021

Morocco’s budget deficit is expected to decline to 6.7% of gross domestic product (GDP) in 2021, according to World Bank (WB) forecasts.

“The budget deficit is expected to decline gradually, allowing the debt-to-GDP ratio to stabilize over the medium term”says the World Bank in its latest report monitoring the economic situation in Morocco.

This improvement is supported by the expected recovery in indirect taxes, which should offset the growing expenditure related to the wage bill and subsidies to liquefied petroleum gas, adds the same source.

From 2022 to 2024, the budget deficit should continue to decline, due to the recovery of tax revenues and the moderation of public expenditure, allowing the debt/GDP ratio to stabilize and then decline.

The gross financing needs of the Treasury are also expected to stabilize by 2024 and average 16.5% of GDP per year, compared to 20.1% of GDP in 2020.

Meanwhile, the current account deficit is expected to increase to 3.7% in 2021 and then gradually decline by 2024, the report said, noting that“As the economic impact of the shock dissipates, remittances from Moroccans residing abroad (MRE) should gradually stabilize and return to their pre-pandemic trend, as should net foreign direct investment flows ( IDE), which will continue to cover a substantial part of Morocco’s external financing needs”.

The Moroccan government’s good access to bilateral and multilateral loans and international financial markets will also help finance the economy, and keep international reserves at a comfortable level, the report notes.