Finance and Economic Development Committee Discusses Progress of Implementing First Six Months of 2020 Budget and General Outline of 2021 Finance Bill
The Finance and Economic Development Committee at the House of Representatives held a meeting on Monday, September 28th, 2020, chaired by the Committee’s chairperson Abdellah Bouanou with the participation of Minister of Economy, Finance, and Administration Reform Mohamed Benchaâboun. The meeting was devoted to hearing a presentation of the Minister on the progress of implementing the first six months of the 2020 budget in addition to the general outline for drafting the 2021 Finance Bill.
In his presentation, Mr. Benchaâboun noted that “the implementation of the 2020 Finance Act recorded, by late August 2020, a decrease of 13.8 billion dirhams in revenues, which translates into 8.8% compared to 2019.”
Also, a decrease of 11.5 billion dirhams in tax revenues was recorded by the end of last August, which is 8.3% compared to last year.
Besides, the Minister noted that “due to these developments, the budget deficit has increased by 15.8 billion dirhams,” adding that, “without taking into account the Special Fund to Manage the Coronavirus Pandemic, the budget deficit has exceeded 55.5 billion dirhams, with an increase of about 25%.”
On another note, the Minister noted that “by the end of the ongoing year, the Government will lower the economic growth forecast to -5.8%, which is bound by the evolution of the epidemiological situation in Morocco.”
In addition, Mr. Benchaâboun noted that "the tourism sector has recorded a decrease of 50% in the added value against the forecast 27%, similarly to transportation sector where the added value decreased by 12% against the forecast 9.6%, and the trade sector where the added value decreased by 9.1% against the forecast 8%." The Minister noted that these developments impacted the growth of the Kingdom's gross domestic product negatively.
As for financing the economy, the Minister noted an increase of around 29 billion dirhams in bank loans during the first seven months of this year. The increase concerns financing enterprises and individuals, with amelioration in financing the national economy as the average interest rate has decreased by 4.58% as average for all bank loans during this year.
Regarding the inflation rate, Mr. Benchaâboun anticipates that “It reaches 0.6% in 2020 compared to 0.2% in 2019.” He added that the unemployment rate has increased by 4.2 points to reach 12.3% and is expected to exceed 13% by the end of the ongoing year.”
The Minister concluded that "the 2021 national economic growth rate is expected to reach 4.8%,” stressing that it will not decrease to the level of 2019 by the end of this year, but by 2022. Concerning the three-year budgetary planning, he noted that "economic growth should reach 4.8% in 2021, 4.2% in 2022, and 4.6 in 2023."
Additionally, the Minister highlighted that the 2021 Finance Bill aims to implement the high royal directives included by His Majesty in the latest speech on the occasion of the Throne Day as priority will be given to the sectors of health and education and core expenditures, which require a total of 33 billion dirhams of additional expenditures.
During the open debate with the Committee members, they commented on the content of the Minister's presentation and presented several suggestions, mainly ones that concern the sectors of tourism and services and measures that aim to overcome economic recession.
The deputies also called for increasing public investment to revive the economic fabric, give a new impetus to the economic cycle, and create job opportunities.
Besides, the Committee members focused on the situation of the agricultural sector. They stressed the necessity to adopt a new strategy to support the rural world and agriculture through injecting numerous stimulus funding in this vital sector.
As for the banking sector, the deputies agreed on the imperative of adopting a citizen-centered approach by the financial institutions in dealing with small and medium-sized enterprises, and to encourage them to promote the financing sector