Finances News Hebdo: Why opt for a budget execution and three-year macroeconomic framework report?
Rabia Allouli : In a logic of strengthening the visibility and predictability of public action, Morocco carried out the reform of the organic law relating to the Finance Law (No. 130-13), adopted in 2015. This revision is is part of an effort to modernize the public service, aiming to put in place good governance mechanisms and to concretize the principles of accountability, transparency and performance in the management of public finances. Under this law, the preparation and regular publication of a budget execution report and a three-year macroeconomic framework are now required, in order to guarantee the sustainability and performance of public finances, on the one hand, and to adapt future economic and financial projections to possible economic developments, on the other hand. In addition, this three-year benchmarking reflects a structural vision of the State, oriented towards medium-term public investments. It is essential to ensure coherence between strategic objectives and budgetary policies, while allowing more rigorous planning of public expenditure based on available resources. This approach provides the time needed to align economic priorities with optimal budgetary management, thereby ensuring efficient use of public funds.
FNH: What are the performance indicators used by the executive to achieve this forecast of 4.6%? And how do you evaluate them?
R. A. : The forecasts for 2025 are based on a series of assumptions linked to the national and international environment. On a global scale, forecasts indicate a 3.2% increase in foreign demand for Morocco, an average price of a barrel of Brent at 80 dollars, as well as a Euro-Dollar exchange rate for 2025 equivalent to that of 2023, with a rate of 1.085. In addition, it is expected that the exchange rate of the Euro against the Dirham will be 10.77 and the exchange rate of the Dollar against the Dirham will be 9.8 in 2025. At the national level, a harvest estimated at 70 million quintals for the agricultural season should lead to a significant recovery in the agricultural sector, with an expected growth in value added of 11%. Furthermore, the growth rate of non-agricultural value added is expected to continue to increase at a rate comparable to that of the previous year, with a forecast of 3.7% in 2025. Regarding foreign trade, it is expected that the External demand addressed to Morocco increases considerably in 2025, with growth estimated at 3.2%, after having stagnated at 2.2% in 2022 and experiencing a contraction of -1% in 2023. However, exports will experience a slight deceleration in due to a reversion to the mean, and are expected to grow by 7.1% in 2025. As for imports, they are forecast to increase by 6.8%, following an 8% increase in 2024. By Consequently, the forecast rate of national growth is 4.6% in 2025. The fact remains that the founding hypotheses of this forecast are based on very volatile macroeconomic variables, particularly in an effervescent geopolitical context and stress. water making forecasts difficult.
FNH: To what extent should the Moroccan population trust economic forecasts given their uncertainty which arises from dependence on climatic hazards or natural disasters?
R. A. : Before answering your question, I remind you that the macroeconomic forecast, in particular that of potential GDP, is based on the macroeconomic model adopted. On the other hand, the figure put forward by the Ministry of Finance integrates several dimensions, in addition to the macroeconomic dimension. This means that this figure is more a matter of political considerations than purely economic ones, hence the divergence that we see between the statistics put forward by our public institutions. To return to the question, I point out that the volatility of macroeconomic variables, whether at the global or local level, is taken into consideration when developing the economic forecast, both for potential GDP and for other predictive variables. . Therefore, the Moroccan population should trust the figures issued by the institution whose economic predictions are the most reliable with a reasonable confidence interval. While pointing out that the forecasts of potential GDP for the year 2025 have converged between the Central Bank and the Ministry of Economy and Finance.
FNH: The 2024 PLF forecast an agricultural added value of 5.9% updated to -1.8%, and we are counting on 11% under the 2025 Finance Law. How do you analyze this gap?
R. A. : Indeed, the underlined gap of 1.8% presents a considerable gap which calls into question the relevance of the macroeconomic indicators put forward during the development of the PLF, particularly if we again compare the figures put forward by the PLF to those of Bank Al-Maghrib. We can note that BAM forecasts growth of 8.6% in agricultural added value in 2025 compared to 11% declared by the PLF for the same year. A remarkable divergence, due firstly to the predictive model adopted, and secondly to the hypothesis of an increase in expected agricultural productivity, which is estimated at 70 million quintals. Furthermore, if we highlight all the difficulties relating to rainfall and the legacy of years of drought, this makes the forecast of an added value of 11% for the coming year, a more optimistic figure than realistic.
FNH: In this case, is the increase from 3.3% in 2024 to 4.6% in 2025 realistic, given that Morocco has substantive issues on its table, such as the reform of the agricultural sector shaken by the water crisis, and unemployment which is becoming more and more alarming?
R. A. : Aware of the uncertainties linked to natural hazards and the inadequacies of groundwater resources, Morocco has been able to diversify the components of its GDP, particularly the non-agricultural one. An element which continues its remarkable improvement in 2024 and 2025, driven mainly by the manufacturing and extractive industries as well as by activities linked to tourism. Consequently, if we take into consideration this change in the development model based on non-agricultural activities, the prediction of the upward trend in the Moroccan economic growth rate remains justified. While emphasizing that the average annual growth rate of the Moroccan economy has not yet reached the level of emerging countries whose GDP is made up of high value-added activities. Which means that the orientation of economic policy towards this diversity of non-agricultural activities is very laudable, but insufficient to move towards desired growth rates.
FNH: Several reforms are defined in this framework note, namely the IR reform, green taxation, hydrocarbon taxation. Will these reforms provide adequate responses to alarming issues, notably unemployment?
R. A. : Absolutely, the efforts made in terms of taxation are laudable, because they reflect a political desire to reduce the tax pressure on businesses, to promote the green economy and also to promote the purchasing power of employees. However, this remains insufficient, particularly in the face of socio-economic scourges of structural scale, such as unemployment. Moreover, the latest figure for this year highlights an unemployment rate reaching 13.6%, a rate that is both alarming and worrying, which raises the question of the effectiveness of public action in its entirety. And which recalls the need to prepare human capital capable of supporting and overcoming the new challenges of activities in the non-agricultural sector, particularly the digital economy and innovation.
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