Rising spending and falling revenue widened Morocco's gross budget gap by 51% y/y (up 14% at end-March) to MAD 30.7bn (USD 3.7bn) in the first four months of the year, the central bank said in its monthly report.
The central bank, however, remained upbeat on the kingdom’s fiscal position, forecasting the budget gap to narrow to 4.9% of GDP in 2014 from 5.5% of GDP the year before. The recently adopted 2014 state budget that envisages a deficit of MAD 32bn. Morocco allocated MAD 30bn worth of food and energy subsidies for the 2014 state budget, down from MAD 42bn the year before.
Total spending rose 10.3% y/y at end-April, bolstered by a 50% y/y expansion in capital expenditures as the government seeks to spur economic growth. Spending on subsidies fell 5.5% y/y at end-April in line with the government and the IMF’s requirements to streamline subsidies. But the subsidies’ cut remain marginal as the government fears social unrest, meaning the burden on the budget will likely not be lifted in 2014.
Budget revenue edged down 0.1% y/y in the first four months of the year due to a 23.7% y/y drop in non-fiscal income, the central bank said.
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