Morocco’s privatization plans to boost its revenue growth, Fitch Solutions says

Privatization plans introduced by the Moroccan government would boost revenue growth in the coming quarters, Fitch Solutions concluded in a commentary published Wednesday on its website.

According to the foundation’s estimates, Morocco’s efforts to privatize public companies, such as telecommunication firm Maroc Telecom, La Mamounia hotel and the Tahddart power plant, will enable the government to increase spendings without having to raise taxes. Fitch Solutions recalls that privatizing these firms will help the country's government gain «substantial revenue gains».

Meanwhile, the agency stresses that the imposition of new taxes in 2019 has alos been fruitfuil. It, basically, believes that this has resulted in a 4.5% growth in tax revenues in the first semester of the current year, compared to same period last year.

More spending for the government to temper social unrests

«This is primarily a result of (…) a 2.5% social solidarity contribution on firms with earnings exceeding MAD40bn (in place until the end of 2020) and excise taxes on sugary drinks and tobacco», Fitch Solutions pointed out.

In addition to this, the agency expects the Moroccan government to make more «generous spending measures» to deal with social unrests. «The Moroccan government has been quick to respond to recent labor union protests by introducing a public sector wage hike and an increase in government-funded family allowances of up to USD30.0 per family», it explained.

Fitch Solutions' forecasts suggest that the Kingdom will also have heavy spendings, because of the compulsory military service it restored, the expansion of the Tayssir cash transfer program and the creation of 30,000 healthcare and education sector jobs. This will result in «keeping the deficit from narrowing at a more rapid pace», Fitch Solutions added.

On the other hand, Fitch Solutions indicates that Morocco’s fiscal trajectory has limited risks, adding that the government’s debt-to-GDP ratio was at 65.3% of GDP in 2018. «We forecast only a modest increase to 66.7% in 2019 and 68.0% in 2020, implying a very gradual increase in debt», Fitch Solutions analysts revealed.

The same commentary concludes that the Kingdom’s debt maturity schedule «remains evenly spread» and that only 29.0% of its «dept is expected to mature by the end of 2020».