Budget extension: Where will the 12 billion Dirhams go?
In four months, the government has just granted a new budget extension. The first of 16 billion Dirhams (1.6 billion USD) was devoted to Government subsidies (to basic commodities) and the news should alleviate the effects of Covid and also the rise in the price of raw materials. In total, 12 billion additional Dirhams will be granted. Of this amount, 2 billion Dirhams will go to the Moroccan Pension Fund (CMR) and 3 billion to meet urgent expenses that could arise between now and the end of the year as well as commitments made vis-à-vis teachers (1 billion Dirhams).
Presented on Tuesday, October 13 before the Finance Committee in the first chamber of the Parliament by Fouzi Lekjaa, Budget Minister, the draft decree validated by the government constitutes a “flexibility” granted by the Organic Finance Law. Its article 60 states that “in the event of imperative and unforeseen necessity of national interest, additional credits can be opened by decree during the year in accordance with article 70 of the Constitution. The parliamentary committees in charge of finance are informed thereof in advance”. The fact is that the situation is urgent! Several companies and public institutions are struggling to recover from the economic repercussions of the pandemic and from the rise in commodity prices. The government thus intends to grant 7 billion Dirhams to support certain state-owned enterprises and public agencies, including Royal Air Maroc and the National Water and Electricity Office (ONEE). Today, the airline company is in a critical financial situation and could end the 2022 financial year with a deficit of nearly 2.7 billion Dirhams! The national carrier was impacted by the closure of borders (from November 2021 to February 2022), and by the vertiginous rise in the price of kerosene and all air-related services, without forgetting the impact of two extremely difficult years (2020 and 2021).
For its part, ONEE is not better off. Last April, the Office had sounded the alarm concerning the financial risks faced with the rise in the price of raw materials. Without subsidies for the purchase of energy products, the losses could peak at 24.14 billion Dirhams. It must also be said that in the absence of market-based electricity prices, the Office continues to suffer from a series of significant negative margins standing at 0.70 Dirhams and 0.939 Dirhams per kilowatt hour, respectively, for the sale of medium voltage and low voltage electrical energy (see graphics). This institution, whose financial health is fragile, risks seeing its financial indicators go into the red, which would reduce the efforts made in recent years. In any case, purchases of hydrocarbons and energy products could peak at 47.7 billion Dirhams versus 22.1 billion in 2021, an increase of more than 25 billion Dirhams. To deal with this situation, the Office has put in place a roadmap which covers, among other things, the rationalization of investments, management expenses and logistical costs… but this remains insufficient and therefore the intervention of the Government remains necessary.
Khadija MASMOUDI
