Saad Eddine El Othmani, Head of Government: Interview

Interview: Saad Eddine El Othmani

What are your administration’s economic and fiscal priorities for 2018?

SAAD EDDINE EL OTHMANI: From 2018 up to 2021 our government aims to achieve sustained economic growth of 5%, to bring the unemployment rate under 8.5% and to maintain macroeconomic stability, including a fiscal deficit of 3% or less of GDP and a debt-to-GDP ratio below 60%. These objectives have been reflected in the finance law for 2018 through four main priorities, namely support for social sectors, incentives for private investment, the dedication to advanced regionalisation and the public administration reform.

Under this framework, the government investment scheduled for 2018 has reached an unprecedented Dh68bn (€6.3bn), with the increase benefitting mainly the education reform implementation, the health sector, the human development initiative and the rural development programme. The government is also working on establishing new mechanisms to improve investment return and impact on citizens and companies. Regarding employment, the government has extended the exemption from income tax and social security contributions to 10 employees per company instead of five, and until 2022 instead of 2019 in order to favour entry-level jobs for the youth and to support companies in hiring high-skilled people. The government has also shifted tax policy towards a progressive corporate tax system, which is likely to be more equitable and more encouraging to small and medium-sized enterprises.

What is your assessment of the changing business environment in Morocco?

EL OTHMANI: Over the last seven years Morocco has risen significantly in the World Bank’s “Doing Business” report, from 129th to 68th. The government’s current programme proposes a series of measures to further improve the business climate, with the goal of bringing Morocco into the top-50 world economies. That said, the government remains committed to making the business climate more attractive to investors through a targeted reduction of existing constraints to investment. We are also introducing performance-based and sector-oriented incentives for start-ups and small and medium-sized industrial companies, in order to improve their competitiveness. In this context the government programme provides for the adoption and implementation of a new investment charter, while supporting the operationalisation of the Competition Council.

How is Morocco planning to balance the pursuit of higher economic growth with the need for social justice and inclusion?

EL OTHMANI: The government is aware of the pressing demands of social justice and equal opportunities for all citizens and believes that responding to these demands is key to strengthening social inclusion and cohesion, as well as to triggering growth and economic development. In this regard, we have made education and employment our main policy priorities, and we are already implementing education and vocational training reforms as well as a multi-dimensional employment action plan.

At the same time, the government is carrying out substantial and unprecedented efforts to engender rural development by increasing the rural development fund to Dh3.5bn (€324.1m). In addition, the government is supporting the education reform through a substantial increase of its budget, from Dh55bn (€5.1bn) in 2017 to Dh59bn (€5.5bn) in 2018, and the elaboration of the framework law consolidating the national vision of this comprehensive and structural reform. These reforms add to the government’s effort to improve the social protection system as part of structural reform of the system, including the continuation of pension reform, medical coverage and the subsidies reform.