The fiscal adjustment is continuing, but at a slower pace than expected. Explanations.
The deficit targets contained in the Finance Act 2016 have not been met. In fact, at the end of December 2016, the budget deficit, excluding privatization amounted to 42.1 billion dirhams, representing 4.2% of GDP, while the Finance Act in 2016 was forecasting a deficit of 3.5% of GDP. The gap between reality and forecast is approximately $ 5.5 billion of DH. Recall that in 2015 the budget deficit stood at 4.4% of GDP (see graph).
How can we explain this counter-performance ? According to the central Bank, this shift can be attributed to at least three factors :
– The significant acceleration of investment spending, particularly in major infrastructure projects (TGV, etc). An increase that it should be closer to the sharp increase in imports of equipment goods in 2016.
– Refunds the most important of the VAT credits to businesses to ease their cash ($8.1 billion in 2016, compared to only $ 5.3 billion to DH 2015).
– The low realization of income in donations from Gulf countries. They were capped at 7.2 billion DH in 2016, up from $ 13 billion to DH provided for in the Finance Bill 2016.
For the next two years, fiscal adjustment should continue, albeit at a slower pace. The central Bank anticipates a budget deficit of 3.7% in 2017 and 3.4% in 2018. It will therefore not be less than 3% of GDP in 2017, as envisioned by the previous government.
Treasury debt should decrease in the medium-term, after several years of increase. In 2016, it would be set at 65% of GDP, and is expected to be 64.7% of the GDP in 2017 (for 50.8% of GDP for domestic debt and 14% of GDP for external debt). Treasury debt, however, remains distant from the levels prior to 2012. At the time, this debt accounted for only 58.2 per cent of GDP.