Public finances: where to find 16 billion more for compensation?

Public finances: where to find 16 billion more for compensation?

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It was admitted from the beginning of the year: the first budget of the new government team is untenable. Today, it is officially obsolete: the Executive has just granted itself, by decree, an extension of 16 billion dirhams to be included in common expenses. A budgetary pirouette, made possible by article 60 of the organic finance law which stipulates that “in the event of imperative and unforeseen necessity of national interest, additional credits can be opened by decree during the year”.

Using this provision gives the government more flexibility. “If he had chosen to go through an amending finance law, the process would have been longer and more laborious”, explains a public finance specialist. “With the decree on the opening of additional credits, the government is content to inform the parliamentary committees in charge of finance”, adds this interlocutor.

This is how Faouzi Lekjaâ, Minister Delegate for the Budget, engaged in the exercise of presentation before the two chambers of Parliament. An opportunity for this government official to recall the budgetary challenges to be met this year.

The abyss of compensation

With the pressure on global commodity markets – under the effect of the revitalization of demand in the aftermath of the health crisis and the shortage caused by the war in Ukraine – the basic forecasts of the government have been shattered. . “The differences between the assumptions of the Finance Act and the current price levels of subsidized products are considerable,” admitted Lekjaâ to elected officials.

© Copyright: Youssef El Harrak – Le360

Just to keep the price of the gas cylinder unchanged, the Compensation Fund has already spent, until the end of May, more than 9.7 billion dirhams. This corresponds to 75% of the amount initially estimated by the 2022 Finance Law (13 billion dirhams) to subsidize this product. From now on, this bill is expected to double to exceed 21 billion dirhams.

The Fund headed by Chafik El Belghiti should also face an unexpected expense of 6.2 billion dirhams. This is intended to support the price of imported wheat, which is supposed to mitigate the fallout from the disastrous cereal campaign. Even for sugar, the coffers of the State should support an additional invoice which borders on the billion dirhams. All in all, the Compensation Fund will need to double its budget to now exceed 32 billion dirhams.

Compensation expenses May 22

© Copyright: Youssef El Harrak – Le360

Despite this extension, the government promises to maintain balanced budgets. “The level of deficit will be maintained at 5.9% as provided for in the 2022 Finance Act”, hammered the Minister Delegate for the Budget. It is that it is counting on the evolution of revenues to cover this amount, representing 60% of the planned expenditure of common charges.

Revenues up

Tax receipts, customs receipts but also transfers from public enterprises and establishments all increased significantly during the first five months of the year. Some 19.6 billion dirhams were collected in addition, compared to May 2021. Except that this development is already integrated into the forecasts of the 2022 finance law, which relies on ordinary revenue of 253.7 billion dirhams, up 26% compared to 2021.

LT Recipes May22

© Copyright: Youssef El Harrak – Le360

“The rates of achievement of these recipes were nothing extraordinary at the end of May. They are around 45% as at each period of the year, ”notes our expert. “Pretending to cover extraordinary expenses with additional revenue is just budgetary acrobatics based on an absolute value at a given time,” he protests.

Especially since the additional expenses are not limited to the 16.8 billion in additional transfers to the Compensation Fund. There is also the exceptional support scheme put in place for the benefit of transport professionals. Nearly 180,000 vehicles transporting people or passengers have benefited from a measure to mitigate the effect of soaring fuel prices at the pump. This additional bill amounts for the first three installments to nearly 1.5 billion dirhams. And it is likely to increase, knowing that prices continue on their upward trend and that the government is already examining other avenues of support, including a return to subsidies from the Compensation Fund.

Investments & debt

Ultimately, the 16 billion dirhams obtained via this decree risk being the first extension of a whole series of budgetary readjustments, imposed by one of the most unfavorable economic conditions. The Executive also has several strings to its bow in an attempt to reduce the pressure on its coffers. He had taken care, within the framework of the finance law, to give himself a margin of reduction of 15% on an investment budget, announced for a record of 245 billion dirhams. An amount which today seems compromised, although the rate of realization of the 87 billion dirhams of investments planned in the General Budget is at the same level as the past year, ie around 37%.

The budget year is far from over and will not fail to bring a new set of surprises in terms of both expenditure and revenue. Especially since growth prospects are more and more moderate. During its last board meeting, Bank Al-Maghrib revised its projections for the growth rate to 1%. On the other hand, he revised the rate of the budget deficit upwards, to 6.3%. In a nutshell: the Executive will still have to go into debt, much more than the 105 billion dirhams planned for this year.

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