While drafting the 2009 Finance Bill, the Moroccan government settled for optimism tinged with realism, and braces itself for the challenges arising from the new economic order. The 2009 Finance Bill allows for new prospects of growth, while granting paramount importance to human development. Those were the backbone ideas set forth by the Minister of Economy and Finance during the press conference devoted to the 2009 Finance Bill.
The sharp international financial crisis and its drawbacks on the national economy were extensively dressed in the Minister`s response.
In spite of a 146% increase in oil prices (from January 2007 through July 2008) and a 124% increase in wheat prices (from January 2007 to March 2008), Morocco has managed to maintain its budget balance. Indeed, the energy bill has largely contributed to the negative impact on the Trade balance. Morocco, however, has preserved a current account that is close to the balance, with inflation held in check. In response to concerns relating to the international crisis, the Minister explained that such a crisis would not affect Morocco, on account of the fact that Moroccan banks do not hold any toxic assets, that their capital transferred abroad is limited compared to their own funds, and that their share in floating foreign investments at the Casablanca Stock Exchange accounts for less than 1.8%.
Mr. Mezouar pointed to the possible impact of such a crisis on the real economy (tourism, exports, transfers made by Moroccan nationals in residence abroad, and foreign direct investments). However, he explained that despite these risks, Morocco could take advantage of real opportunities given its macro-economic performance and the solid position of its financial system. Reforms launched by the government have further consolidated the resilience of the economy and its capacity to withstand the shock the minister stated, citing IMF testimonials in this regard.
With regard to the national economic scene, Mr. Mezouar affirmed that Morocco should diligently pursue its strategy to sustain economic growth and consolidate fundamental balance. The figures released attest to a good economic performance: 6.8% current growth against a forecasted rate of 6%, and a budget deficit maintained at around 2% of GDP. All these achievements were made in spite of subsidizing expenses, and on the impact of social dialog with trade unions, or the non fulfillment of privatization operations which had been scheduled.
Mr. Mezouar also emphasized other positive aspects, such as good fiscal revenues, stabilizing expenses earmarked for the running of State-owned institutions, and the activation of solidarity efforts for some state-owned enterprises that have improved their financial situations.
The 2009 Finance Bill.
The Minister of Economy and Finance, Mr. Mezouar, explained that the 2009 Finance Bill was drafted with sense of apprehension and realism, as reflects determination of the government. This bill has two major objectives:
1- Maintaining economic growth at a higher level in spite of an unfavourable international climate.
2- Giving new impetus to human development, especially in the sectors of health and education.
It is, therefore, expected that the 2009 Finance Bill will contribute to an environment that is conducive to economic growth. Measures to be taken to this effect include increasing public investment, diversifying sources of growth, promoting spending power, improving the business environment, and emphasizing values of good corporate governance. It must be noted that the 2009 Finance Bill grants paramount importance to Human development.
Mr. Mezouar underlined the increase in the state budget allocated to primary sectors such as education and training, health, housing, and rural development through the INDH (National Initiative for Human Development).
In conclusion, the minister summed up the main characteristics of the 2009 Finance Bill.
- This bill has an affirmative social dimension and is designed to protect citizens` right to education, health and housing.
- It is also designed to narrow regional discrepancies.
- It has managed to maintain macro-economic balance, contain budget deficit at 2.9% of GDP, lower the inflation rate to less than 3%, and hold in check the deficit in the current account of the country`s balance of payments to about 1% of GDP.
The minister added that protecting the fundamentals of the national economy will boost the confidence of economic and international players, which will in turn boost investment and create jobs.
Concerns of the Press.
Questions raised during the debate following the presentations revolved around the following issues:
- The list of companies that are likely to be privatized in 2009 and the government`s privatization policy- Issues of subsidization.
- Real estate Crisis.
- The Government`s measures in the face of the international financial crisis.
- Impact of the international financial crisis on the sector of tourism and on money transfers made by Moroccan nationals in residence abroad.
- Procedures relating to financial aid to poor families for schooling their children.
- VAT reform.
- Low efficiency levels of foreign trade agreements with the USA, Turkey and Arab countries.