RABAT, Oct 14 (Reuters) - Morocco’s cabinet has proposed a 2021 budget that envisages a fiscal deficit of 6.5% of gross domestic product (GDP), down from an expected 7.5% this year, the royal palace said on Wednesday.
The draft budget was approved at a ministerial council chaired by King Mohammed VI and it will now be sent to parliament for approval.
It is based on a forecast of 4.8% economic growth after an expected contraction of 5.8% this year, the palace said. The pandemic has caused a surge in state spending and a drop in tax revenue this year, widening the fiscal deficit, it added.
The 2021 draft budget provides for increasing public investments to 230 billion dirhams ($25 billion) from 182 billion dirhams in 2020, with 45 billion dirhams going to a special fund to promote small businesses.
The health budget will be increased by 2 billion dirhams to 20 billion dirhams as Morocco announced a plan to generalize mandatory health coverage in five years.
To protect “emerging and fragile industries”, the council approved amendments to a trade deal with Turkey with whom Morocco incurs an annual trade deficit of $2 billion.
The pandemic has hit Morocco’s inflow of hard currency from tourism and exports. The central bank expects government debt to surge to 76.1% of GDP in 2020 from 65% in 2019.
The government extended an emergency decree to Nov. 10 giving it leeway in restoring restrictive measures in areas with high coronavirus infections.
On Wednesday, Morocco had reached a total of 160,333 confirmed cases, including 2,726 deaths and 23,648 active cases with 525 in critical condition. (Reporting by Ahmed Eljechtimi, editing by Angus McDowall and Lisa Shumaker)
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