Morocco Plans $6.3 Billion Social Spending Package While Holding 2027 Deficit at 3%

October 26, 2026 | By Semahegn Nigatu

Morocco plans to spend 62 billion dirhams (about 6.3 billion US dollars) on social programmes in 2027 while keeping its fiscal deficit at 3 percent of gross domestic product, as the government seeks to support household incomes and expand public services without loosening its deficit target.

Finance and Economy Minister Fouzi Lekjaa presented the draft budget to parliament on Friday, projecting economic growth of 3.7 percent next year, down from an estimated 4.7 percent in 2026. The forecast assumes an average agricultural season, according to the budget document.

Public debt is expected to decline to 66.9 percent of GDP in 2027 from 67.5 percent this year, while the government’s total financing requirement is projected to fall by 7.4 percent to 159 billion dirhams.

The proposed spending package includes changes to personal income tax, pension increases, higher financial assistance for eligible families, electricity subsidies and measures to promote youth employment.

Under the plan, employees earning less than 10,000 dirhams a month would be exempt from personal income tax. Lekjaa said the measure would cover 87 percent of employees.

The government also plans to increase health spending by 7 percent to 45.5 billion dirhams and raise education expenditure by 4.6 percent to 121 billion dirhams.

The budget reflects the priorities of a new governing coalition formed after the September 23 elections, with greater emphasis on purchasing power, public services and youth employment following social tensions and youth-led protests.

To help finance its spending commitments, the government is proposing higher taxes on selected businesses and consumer products. Fuel distribution companies earning profits exceeding 100 million dirhams would face a corporate tax rate of 40 percent under the draft budget. The sector has previously faced sanctions from competition authorities over anti-competitive practices.

The proposals also include higher excise taxes on soft drinks, alcoholic beverages, cigarettes and electronic cigarettes.

The government’s fiscal strategy seeks to combine expanded social support with tighter control of public finances. The projected reduction in the deficit and public debt ratios will depend partly on economic growth, agricultural output, revenue collection and borrowing costs.

The draft budget also authorises defence expenditure commitments of up to 190.5 billion dirhams. Morocco plans to balance domestic and external borrowing according to market conditions, as its total financing requirement declines.

Lekjaa criticised aspects of the country’s economic model, arguing that insufficient regulation had contributed to monopolistic practices and rent-seeking. He called for a stronger state role in addressing corruption, conflicts of interest and monopolies while protecting food and energy sovereignty.

The proposed budget now sets out the government’s spending and revenue priorities for 2027, with its implementation dependent on parliamentary approval and the performance of the economy.

Source: FSX Business News