RABAT, Oct 24 – Morocco expects to hold its fiscal deficit at 3% of gross domestic product in 2027 despite higher social spending and tax reductions, newly appointed Finance and Economy Minister Fouzi Lekjaa said on Friday while presenting the draft budget to parliament.
The government forecasts economic growth of 3.7% next year, down from an estimated 4.7% in 2026, assuming an average agricultural season. Public debt is projected to decline to 66.9% of GDP in 2027 from 67.5% this year, according to the budget document.
The proposed budget reflects the priorities of Morocco’s new government coalition, formed following the September 23 elections. Its agenda places greater emphasis on household purchasing power, public services and youth employment, following Gen Z protests and the Ceuta migration crisis in July.
Morocco allocates $6.3 billion to social measures
The government plans to spend 62 billion dirhams, equivalent to approximately $6.3 billion, in 2027 on measures intended to improve social services, support household incomes and reduce inequality.
The package includes reforms to the distribution of basic goods, initiatives to promote youth employment and an exemption from personal income tax for employees earning less than 10,000 dirhams per month. According to Lekjaa, the exemption would cover 87% of employees.
Other measures include pension increases, higher financial assistance for eligible families and electricity subsidies.
Health spending is set to increase by 7% to 45.5 billion dirhams, while education expenditure is projected to rise by 4.6% to 121 billion dirhams.
Lekjaa argued that previous social policies had been constrained by an economic model that placed greater emphasis on market forces than regulation, contributing to monopolistic practices and rent-seeking.
He described “Savage capitalism and neo-liberalism” as central to social tensions and called for a stronger state role in tackling corruption, conflicts of interest and monopolies while protecting food and energy sovereignty.
Higher taxes proposed for fuel distributors
The draft budget proposes raising the corporate tax rate to 40% on profits exceeding 100 million dirhams earned by fuel distribution companies. The sector has previously faced sanctions from competition authorities over anti-competitive practices.
The government also proposes increasing excise taxes on soft drinks, alcoholic beverages, cigarettes and electronic cigarettes.
The measures form part of a broader fiscal strategy that seeks to finance expanded social programmes while maintaining the government’s deficit target.
Defence commitments and borrowing plans
The draft budget authorises defence expenditure commitments of up to 190.5 billion dirhams, alongside the planned increases in social-sector spending.
Morocco’s total financing requirement is expected to fall by 7.4% to 159 billion dirhams in 2027. The government intends to balance domestic and external borrowing according to prevailing market conditions.
The projected decline in public debt relative to GDP would accompany the government’s effort to maintain fiscal discipline while expanding support for households and public services.
The budget’s execution will depend on economic growth, agricultural performance, revenue collection and the cost of financing. The projected slowdown in growth to 3.7% in 2027, from 4.7% this year, makes the government’s ability to sustain higher social expenditure while holding the deficit at 3% of GDP a central fiscal consideration.
