At a time when the world is facing unprecedented climate challenges, Morocco is resolutely committed to the path of ecological transition. The “Green Public Finances” report, prepared by the economic service of the French Embassy in Morocco and published on June 10, highlights the Kingdom’s efforts to direct its public finances towards decarbonization, with ambitious initiatives and reforms. in depth. This document highlights the importance of public finances as a major lever for a sustainable and resilient economy.
“Green public finances: a key tool for the ecological transition in Morocco?” It is based on this question that the French Embassy in Morocco undertook to analyze the integration of the issue of sustainability in Moroccan public finance equations.
In a report dated June 10, the representation of France in the Kingdom highlights “the financing of the ecological transition as the most important macroeconomic challenge for Morocco by 2030”.
According to the authors of the document, “if the private sector must play its role, the orientation of public finances towards decarbonization is essential to the extent that the public sector represents more than two thirds of national investment”, the cost of financing of the ecological transition being estimated at more than 5% of GDP per year until 2030.
Carbon neutrality
“Faced with the climate emergency, Morocco displays an ambitious and proactive environmental policy, aiming for carbon neutrality by 2050,” recalls this analysis. Party to the United Nations Convention on Climate Change (UNCAC) since 1995, Morocco has strengthened its involvement in international initiatives, culminating with the organization of COP22 in Marrakech in 2016.
The National Strategy for Sustainable Development 2030 (SNDD) and the Low Carbon Development Strategy for 2050 are the pillars of this approach, setting clear objectives for reducing greenhouse gas (GHG) emissions and development of renewable energies.
The study also recalls that Morocco’s Nationally Determined Contribution (NDC) was increased in 2021, with a target of reducing GHG emissions by 45.5% by 2030 compared to the status quo.
This commitment also translates into ambitious targets in the energy sector, with installed renewable electricity capacity forecast at 52% in 2030. Morocco is also exploring the establishment of a carbon pricing system to strengthen its decarbonization efforts, underlines the same source.
The crucial role of public finances
However, Morocco’s green transition, essential for its international competitiveness and its integration into the European geo-economic space, will require massive investments. The World Bank estimates that the implementation of the CDN requires a financial effort of USD 78.8 billion over the period 2020-2030, or USD 7.2 billion per year. In this context, public finances will play a major driving role, with investment rates among the highest in the world (25% of GDP), two-thirds of which are of public origin.
Substantial efforts in terms of green taxation
Morocco is embarking on profound reforms of its taxation to support the ecological transition, the authors of the document also wish to emphasize. The TIC (Tax on domestic consumption), the TEP (Ecological tax on plastics) and the progressive reduction of VAT on electricity from renewable sources are emblematic measures. In 2024, a major study will be carried out to establish a carbon tax, in consultation with the ministries concerned and with the support of international financial institutions.
Mobilization of all the levers
To achieve the various objectives, the report highlights the Kingdom’s desire to mobilize all green public finance instruments, including green budgeting and bonds, sustainable public procurement, and green management of public establishments.
In 2023, a partnership with the AFD group, through a public policy budget loan of €80 million, aims to guide public action on ecological and energy transition issues. This loan is linked to a “Climate” loan from the World Bank, aiming to translate strategies into concrete developments in public finance instruments.
Sanae Raqui / ECO Inspirations
