Mr. Mohamed BENCHAABOUN, Minister of Economy and Finance, presented, Thursday, July 25th 2019, the outcomes of the execution of the Finance Act for the year 2019, first to the Government Council and then before the Finance Committees of both Houses of Parliament. He also made a presentation on the prospects of preparing the Finance Bill for the year 2020 in compliance with the provisions of Article 47 of the Organic Law on the Finance Act.
Thus, It was stated that the general growth index of the Gross Domestic Product (GDP) for the year 2019 was at 2.9%, with a satisfactory results of non-agricultural activities. It was also noted that the framework for preparing the Finance Bill is based on the High Guidelines of HM King Mohammed VI, which enabled Morocco to launch a range of programs, projects and strategies over the last 20 years.
In the presentation of the Minister, stress was on the general economic situation, while highlighting the main international and national economic indicators, characterized by a drop in global economic growth to 3.2% in the first half of 2019 against 3.6% in the same period of 2018. This decline occured in the euro area with which the Kingdom undertakes large commercial transactions. It is also caused by the increase in oil prices compared to 2016 and 2017, during which prices rose from 44 to 54.4 dollars, before reaching 77.1 dollars in 2018 and declining to US $ 68 in 2019. Global trade pressures in many regions, including the Middle East as well as the impact of Brexit that were also quoted as having a worldwide influence.
As for the national economy, a further improvement of the financing conditions of the national economy was noted with the increase in bank loans and the fall in the inflation rate to 0.1% in 2019 against 2.3% in 2018. The unemployment rate declined by 0.5% in2018 to reach 10%. Despite this slight decrease, the unemployment rate in urban areas remained at 14.5% , while that of graduates averages around 19.5%, and efforts in that regard should be intensified.
In addition, imports increased by 3.2% and exports by 2.7%, resulting in an increase in the trade balance deficit of around 5.2%, compared with a 4% increase in tourism receipts. Indicators recording improved performance include textiles and leather exports (1.2%), agricultural exports (5.1%), automotive (12%) and electronics (0,6%). Hence, the current account deficit of the balance of payments could decline from 5.5% in 2018 to 4.5%.
In relation to the implementation of the 2019 Finance Act in the first six months, it was noted that current income increased to 122 billion dirhams with an achievement rate of 49%, that is an increase of 7% in comparison to 2018.
Current expenditures, on the other hand, increased by 4.7 billion dirhams, due to the rise in the wage bill to 54.4 billion dirhams, while the achievement rate remained at 46 percent. Total expenditure reached 114 billion dirhams, 7.9 billion dirhams of which for compensation expenses. Concerning investment issues in the first half of 2019, the achievement rate was 56.4%, that is 32.5 billion dirhams, while the budget deficit rate declined from 21.1 billion dirhams in the first six months of 2018 to 16.6 billion dirhams during the same period of the current year including privatization revenues.
Future challenges related to the Finance Act 2020 and 2021 were also refferred to during the presentation. This includes the
implementation of social dialogue commitments, having reached 5.2 billion dirhams this year against 6 billion dirhams in 2020 and 2.9 billion dirhams in 2021, the initiation of the comprehensive reform of the pension system, as well as the deadlines concerning the Compensation Fund and the implementation of advanced regionalization. This program was up to 8.5 billion dirhams of financial resources directed this year to the regions against 10 billion dirhams in 2021.
The Ministry’s vision for the coming years in terms of planning the overall budget was also presented both to the Government Council and the Parliament.