The impact of drought on growth rate reduced significantly in comparison with the last decade : 28/03/2012

The impact of drought on growth rate reduced significantly in comparison with the last decade

Mr. Nizar Baraka, Minister of Economy and Finance, noted Friday, March 23rd 2012, that the impact of drought on growth rate became less important over the past decade, a fact reflected by positive rate growth during the drought years recorded in 2005 and 2007, compared with that recorded earlier in 1995.1997 and 1999.    

As an answer to the statements made by Members during the general debate on the 2012 Finance Bill to the Committee on Finance and Economic Development, Mr. Baraka stated that the contribution rate of cereal growing in the structure for agricultural value added was reduced to 5th (1 of 5) over the past decade, adding that the cereals` share is currently around 18% thanks to the progress of other crops less affected by drought and those of irrigated areas, in addition to the growing share of the livestock sector.

He added that the national economy rose to a new development round since it achieved a growth rate of 4.2 during the period 2007-2010, against 3.8 from 1999 to 2005 and 3.2 during the period from 1990 to 1998, highlighting the positive change of the national economy during the last 10 years.

Similarly, he noted that services sector represents more than 56%, while industrial activity is around 28%. The Minister also mentioned the positive contribution of domestic demand and public investment in the development, in that public investment increased from 83.9 billion dirhams in 2007 to 188 billion dirhams in 2012.

The effective execution of the Finance Act started January 2012 through monthly decrees on funding allocation. This didn`t require introducing amendments on the first draft of the Bill, stated the Minister, noting that the government did not wait for the adoption of the Bill to take urgent proactive and confidence-building measures towards economic and social operators.

Therefore, he referred to HM King Mohammed VI`s launch of RAMED generalization program for the most deprived persons, the setting up of an urgent program to face the impact of rainfall deficiencies on agriculture and the rural world, in accordance with the Royal Directives, and the extension of the suspension of customs duties on the import of durum wheat, soft wheat and barley to ensure market supply with flour and fodder and to control the prices of these products.

He recalled the Head of Government`s note on the activation of the Code of good Practices in corporate and public institutions governance , for the reform of the mechanisms of management and control of these entities, the Memorandum of Understanding Government / CGEM on ensuring mutual trust and regular cooperation in terms of economic issues, sustained funding to realize strategic projects, the activation of the Casa City Finance as well as the acceleration , starting from this week, of the VAT refunds to companies, giving priority to SMEs.

The Government ensured, in a conscious and responsible way, that the Finance Bill "is not to affect the programmed budgets, except for new funding and transfers so as not to slow down economic momentum, mainly for strategic projects, "he further explained.

With regard to linking sector based budgets with expenditure procedures, the Minister explained that in this case, "social sectors will end up losing out the most especially education and Health sectors (an implementation rate not exceeding 50%) ", showing that the financial management program of the regional academies of education and training is still at a very early stage and needs to be upgraded and framed as a basis for deconcentration project called upon to be involved in the proposed advanced regionalization program.

The new organic budget law, under review, will allow the budget structure review in light of priorities, objectives and relate expenses with the results, he continued.

During the meeting, the majority assessed that the Finance Bill meets popular expectations and is ambitious to cope with the economic crisis, despite a difficult economic climate and the effects of drought looming on the horizon, while the opposition members criticized the delay to adopt the bill and that the measures it contained will have no impact on the daily life of Moroccans, despite the opportunities afforded by the Constitution that allows the Executive to take bold steps in economic, political and social fields.