Morocco Unveils Austerity Measures and Foreign Borrowing to Combat COVID-19 Economic Impact

The next Council of Government will consider a draft decree-law aimed at suspending spending commitments and exceeding the ceiling on external debt provided for in the 2020 Finance Act.

Draft Decree-Law No. 2.20.320 on the austerity measures taken to curb the COVID-19 crisis was transmitted to the ministers on Friday, April 3, by the Secretary General of the Government. It authorizes the government to exceed the ceiling on external borrowing set at 31 billion dirhams in the 2020 budget.

These measures concern the drop in tax revenues caused by the temporary shutdown of several sectors of activity, as well as the drop in foreign trade; the drop in foreign exchange reserves following the drop in exports, the halt in tourism and the drop in remittances from Moroccans living abroad; the reorientation of budgetary efforts towards the Departments of Health and Interior as well as the economic and social support of households and businesses affected. It also authorizes the suspension of all spending commitments from the State’s general budget, autonomous state-managed services, special Treasury accounts and public institutions.

Furthermore, it should be noted that the salaries of civil servants, the expenses of the Ministry of Health and the security departments, as well as the SEGMA and the CST that depend on them, are not taken into account by the said austerity measures that will come into force in the coming days. The same applies to expenses dedicated to the management of the pandemic, those related to rent, water, electricity and telecommunications, compensation and study grants, expenses of the Social Cohesion Support Fund, and important operating and investment expenses of an urgent nature, the list of which will be drawn up by the Minister of Finance and the relevant authorizing officer.