Public finances: Subsidies for basic commodities are growing, investment is falling
The surge in international gas and wheat prices is having an impact on the Government´s budget. At the end of February, expenses related to subsidies for some basic commodities reached 5.4 billion MAD, which represents 31.7% of the budget allocated in the Appropriations Bill. Those expenses reflect only part of the price surge, and the impact could be heavier in the coming months. This would result in exceeding the budget allocated to subsidies for some basic commodities.
For the first two months of the year, operating expenses have increased by 21%, driven by the increase in equipment, which has risen by 20.1%, and common expenses, which have increased by 418.3% as a result of the subsidies for some basic commodities. Personnel expenses at 24 billion MAD are slightly down (-0.4%) compared to the same period last year.
Scrutinized by economic operators, investment has declined by 2.5% to 14.9 billion MAD. Out of a budget of 87.4 billion MAD, 17% have been spent. At first sight, the Government does not intend to touch this budget item to cope with the contingencies generated by the war in Ukraine. The Ministry of Finance emphasizes the possibility of mobilizing additional resources without freezing investment and hindering the recovery, which relies in particular on public procurements.
Expenditure is also marked by a 44.3% increase in tax refunds, rebates, and restitutions: 1.18 billion MAD. The VAT refunds, which are a breath of fresh air for the cash flow of companies, reached 1.16 billion MAD. When one includes the share borne by local governments, they amount to 1.59 billion MAD versus 1 billion in February 2021.
On the revenue side, statistics from the Kingdom’s General Treasury show an increase of 7.2% due to the good performance of direct taxes (+3.1%), customs duties (13.8%), and indirect taxes of 14.2%.
Net VAT revenues rose by 13%. On the import side, this value-added tax rose by 27.1%, while on the domestic side it fell by 2%. Corporate income tax, registration fees, and the domestic consumption tax on tobacco do increase reasonably.
Nonetheless, at the end of February, the budget deficit increased compared with the same period last year. It reached 11.5 billion versus 10.2 billion at the end of February 2021.
Khadija MASMOUDI
