The year begins with a deficit of MAD 9.6 billion

The first month of the fiscal year does not upset the balance, but it does reveal areas of tension. At the end of January 2026, the Treasury’s expenditure and revenue situation showed a budget deficit of MAD 9.6 billion (USD 1.04 billion) compared to MAD 6.9 billion (USD 751 million) a year earlier.
Behind this widening gap, the picture is more nuanced: spending is generally under control, while revenues are suffering from an unfavorable base effect.
Ordinary revenue amounted to MAD 29.77 billion (USD 3.24 billion), down 8.3% year-on-year. The contraction was mainly tax-related (down 9.4%), but the comparison with January 2025 is skewed by the exceptional voluntary regularization operation that boosted income tax. Income tax thus fell by 24.4%. Adjusted for this effect, the trend would be positive, thanks in particular to withholdings on profits from the sale of securities. Corporate income tax rose by 17.4%, confirming that the profit base remains solid.
VAT fell by 9.1%, affected by both domestic and import components. Refunds reached MAD 1.7 billion (USD 185 million) compared with MAD 607 million (USD 66 million) a year earlier. This acceleration automatically weighs on net cash receipts but reflects a deliberate policy: to improve cash flow for businesses and strengthen tax neutrality.
Speaking to the Moroccan employers association (CGEM), Younes Idrissi Kaitouni, Director General of Taxes, pointed out that refunds have risen from an annual average of $7.3 billion (USD 795 million) to more than 21 billion (USD 2.3 billion) since 2022, peaking at 25 billion (USD 2.72 billion) in 2025. The administration insists that the 74% increase in revenue over the last five years between 2021 and 2025 is based more on broadening the tax base and improving compliance than on raising rates.
On the expenditure side, discipline remains evident. Overall spending is up 0.2%. Ordinary expenditure is falling sharply (-22.4%) due to a base effect: in January 2025, an exceptional transfer of MAD 12 billion was made to the social protection support fund. Expenditure on goods and services is down 23.6%, while the wage bill is up 6.2%. Interest on debt increased by 42.5%, mainly due to domestic debt. Compensation fell by 28.8%, reflecting less pressure on subsidized prices. Investment increased by 15.1% to nearly MAD 15 billion (USD 2.3 billion).
Khadija MASMOUDI