Morocco's budget deficit projected to ease by 2026 with tax reform boost

The budget deficit is expected to narrow by 2026, reaching around 3.2% of gross domestic product (GDP), down from 3.6% in 2025, according to the High Commission for Planning (HCP).

This improvement is expected to reinforce the ongoing consolidation of public finances, the HCP notes in its 2026 Budgetary Economic Forecast (BEP). The institution attributes the trend primarily to rising tax revenues, which should support the gradual reduction of the deficit.

Ordinary revenues are projected to maintain their upward trajectory, amounting to nearly 23.8% of GDP in 2026, compared with 24.3% in 2025. This evolution is expected to be driven by continued growth in both tax and non-tax revenues.

Tax revenues are forecast to reach nearly 20% of GDP in 2026, up from 19.6% in 2025, reflecting the completion of the structural tax reform launched in 2021, alongside new measures introduced under the 2026 finance law.

Direct taxes are thus expected to account for around 9.2% of GDP in 2026, benefiting from higher corporate income tax (IS) and personal income tax (IR) receipts. Indirect taxes, meanwhile, are projected to rise to nearly 8.5% of GDP.

As for non-tax revenues, whose share of ordinary revenues increased from 12% in 2015 to 18% in 2024, they are expected to represent approximately 3.5% of GDP in 2026.

In parallel, innovative financing mechanisms have expanded significantly over recent years, rising from 9.5 billion dirhams in 2019 to nearly 35.3 billion dirhams in 2024, for a cumulative total of 109.6 billion dirhams over the period.

On the expenditure side, overall spending is expected to remain on an upward path, stabilizing at 27.3% of GDP in both 2025 and 2026. This trend is largely driven by an increase in ordinary expenditures, projected at nearly 20.9% of GDP in 2026, as well as higher investment spending.

Investment expenditures are set to rise to 6.3% of GDP in 2026, reflecting the continued rollout of major structural projects, particularly in transport infrastructure, water security, and preparations linked to the 2030 World Cup.