January 19, 2012 / 12:33 PM / 9 years ago

Morocco's new govt targets 5.5 pct GDP growth

RABAT (Reuters) - Morocco’s new government is to target average economic growth of 5.5 percent a year during its 2012-2016 mandate, from around 4.5 percent in the previous five years to boost job creation, Prime Minister Abdelilah Benkirane said on Thursday.

Morocco's Prime Minister Abdelilah Benkirane speaks at the first meeting of the government in Rabat January 5, 2012. REUTERS/Stringer

Outlining his government’s programme before parliament, Benkirane also said he targets an annual inflation rate of 2 percent until the end of 2016, marginally above the average level of the previous five-year period.

Benkirane pledged to “ensure strong and sustainable economic growth that would help boost job creation” to reduce the jobless rate to 8 percent by the end of 2016 from 9.1 percent currently.

Morocco’s central bank estimates the economy grew by between 4 and 5 percent in 2011.

Benkirane is from Justice and Development (PJD), the moderate Islamist party that won a November election which the Arab world’s longest-serving monarchy had brought forward by almost a year to pre-empt the sort of popular revolt that has ended the rule of four Arab leaders.

Having won 27 percent of seats in parliament, PJD formed a coalition with three political parties that have been part of previous governments.

Benkirane pledged to engage in an unprecedented push against corruption, which PJD officials say is costing Morocco 2 percent of its GDP annually.

“The government will try to base economic governance on transparency, efficiency and improve the business environment and fight speculation and monopoly situations by adopting several measures,” he said.

Benkirane said his government plans a “thorough tax reform” to boost public revenues and would “try to initiate a public debate” over ending a tax-free regime for a predominantly rudimentary agricultural sector, the country’s biggest employer.

The tax reform coupled with improved management of public resources should help Morocco bring down the budget deficit to around 3 percent of GDP before the end of 2016, he added.

Morocco raised food and fuel subsidies in 2011 to 52 billion dirhams from a budgeted 17 billion dirhams, and in May raised spending on public sector wages by 11 percent to 95 billion dirhams with salary hikes.

This followed street protests, inspired by the revolts in Tunisia and Egypt, which aimed to press King Mohammed, one of the biggest stakeholders in the Moroccan economy, to transform his leadership into a British- or Spanish-style monarchy.

The handouts contributed to raising the government’s budget deficit in 2011 to 5.6 percent of GDP from 4.5 percent in 2010, a government minister told Reuters on Tuesday.

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