New budget focuses on Morocco's social welfare

2007-11-12

Morocco's proposed 2008 budget includes ambitious measures to improve education, housing and health care while enhancing the country's economic competitiveness.

By Sarah Touahri for Magharebia in Rabat – 12/11/07

[Sarah Touahri] Finance Minister Salaheddine Mezouar presents the 2008 budget before Parliament

Morocco's government announced on Wednesday (November 7th) that fully half of the proposed 2008 budget is dedicated to social welfare programmes. While presenting the draft budget, Minister of Finance and the Economy Salaheddine Mezouar said the bill is "part of a new vision placing human development and the struggle against poverty and marginalisation at the heart of our efforts."

In 2008, 1.2 billion dirhams will be earmarked to the National Human Development Initiative. The government plans to improve the quality of teaching through a 9.7% funding increase, and intends to complete a programme designed to make education available throughout the country, encourage private sector involvement, cut school drop-out rates and step up the implementation of vocational training and literacy programmes.

The new budget earmarks a total of 1.7 billion dirhams for the housing sector. The pace of subsidized housing construction will be accelerated by freeing up government-owned property and reducing red tape. Additionally, a new type of tax-free housing for families with limited means will be rolled out next year.

The health budget is to increase 10.4% over that of 2007, and the government will continue promoting compulsory medical insurance for citizens with limited income and for those working in the private sector.

Regarding employment, the government has pledged to carry on its initiative to train 15,000 new engineers per year by 2010, 3,300 new doctors per year by 2020 and 10,000 new social service workers per year by 2012.

In order to maintain purchasing power and reduce the cost of living, the government aims to hold inflation at 2% and to allocate funds to subsidise essential consumer goods. The budget for the Caisse de Compensation, which handles the subsidies, will increase from 15 billion dirhams in 2007 to 20 billion dirhams next year.

According to the finance minister, the government has forecast growth of 6.8% in 2008 and a reduction in the budget deficit from 3.4% of GDP to 2.4%.

The government has also announced a raft of measures to overhaul the fiscal sector. One of the key changes will be a reduction of the corporate tax from 35% to 30%. In addition, the maximum rate for customs duty on imported industrial products will be reduced from 45% to 40%.

The finance committee of the Chamber of Representatives began debating the bill as soon as it was presented to Parliament. Committee chairman Cheikh Amar gave a positive assessment of the draft budget, particularly with regard to the growth forecasts, tax reforms and plans for the Caisse de Compensation.

Some members of the Parliament have expressed concerns with the new budget.

Fatima Mustaghfir, a deputy representing the Popular Movemet, said that the bill "has, as usual, tried to spread itself over numerous sectors when it should have concentrated on three or four to achieve significant results."

The Moroccan public is also sceptical about the new budget. Said Belmkhoter, a nurse, told Magharebia the figures and measures which were announced for the health sector are nothing new and are merely a continuation of strategies already in place. He also said the measures will have to translate into real action if a broad swath of the population is to benefit.

Teacher Mourad Madani said it will be impossible to achieve 6.8% growth as the current farming season has gone poorly so far and the prices of oil and raw materials are rising steadily.