Morocco eyes lower budget deficit in 2012

RABAT: Morocco expects economic growth to slow slightly to 4.8 percent next year but still hopes to cut its budget deficit to 4 percent of gross domestic product, a document outlining the draft budget for 2012 showed.

Anxious to avoid the kind of unrest seen in other parts of the Arab world and worried about increases in global commodity prices, Rabat raised public salaries this year and almost trebled funds for food and energy subsidies to 48 billion dirhams.

That has raised pressure on the deficit, especially at a time when the economic slowdown in Europe --Morocco's main trading partner -- has eaten into the government's tax and customs revenues and its foreign currency reserves.

Next year the government plans to raise public investment by 6.6 percent, to 178.3 billion dirhams and raise to some 25,000 from 19,000 in 2011 the number of new jobs in the public sector.

The central bank sees the deficit at 5 percent of GDP this year, less than an International Monetary Fund (IMF) forecast of at least 5.5 percent, which would be the highest in ten years.

The government sees GDP growth at 5 percent this year.

Inflation is expected to reach 2 percent in 2012, unchanged from what the government had initially pencilled for the 2011 budget. The central bank cut this figure this week to 1.4 percent.

The 2012 draft budget was based on an oil price of $100 per barrel which is 33 percent above the basis for 2011.

Copyright Reuters, 2011