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 should gradually decrease, allowing the debt-to-GDP ratio to stabilize in the medium term”, specifies the World Bank in its latest report to monitor the economic situation in Morocco.
This improvement is supported by the expected recovery in indirect taxes, which should offset increasing expenditure related to the wage bill and subsidies to liquefied petroleum gas, adds the same source.
From 2022 to 2024, the budget deficit is expected to continue to narrow, due to the recovery in tax revenues and the moderation of public spending, allowing the debt-to-GDP ratio to stabilize and then decline.
The Treasury’s gross financing needs are also expected to stabilize by 2024 and reach on average 16.5% of GDP per year, against 20.1% of GDP in 2020.
In addition, the current account deficit is expected to increase to 3.7% in 2021, then gradually decrease by 2024, the report said, noting that “As the economic impact of the shock wears off, remittances from Moroccans living abroad (MRE) should gradually stabilize and return to their pre-pandemic trend, as should net flows of foreign direct investment (FDI) , 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 to international financial markets will also help finance the economy, and keep international reserves at a comfortable level, the report notes.
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