EYE ON THE PRIZE

Morocco 2020/21 | ECONOMY | INTERVIEW

The ministry aims to enact reforms that will significantly improve the business environment, thereby promoting greater investment, employment, and inclusiveness.

Mohamed Benchaâboun
BIOGRAPHY

Morocco's Minister of Economy, Finance, and Administrative Reform, Mohamed Benchaâboun, was previously Minister of Economy and Finance. Between 2008 and 2018, he was chairman and CEO of Banque Centrale Populaire (BCP), and from 2003-2008 he was director general of the National Telecommunications Regulatory Agency. He is a member of the Economic, Social and Environmental Council and of the Councils of the Mohammed V Foundation for Solidarity and the Mohammed VI Foundation for the Protection of the Environment.

What achievements are you most proud of since being appointed minister?
Under the leadership of His Majesty King Mohammed VI, Morocco has strongly boosted its reform process by launching large-scale projects accelerating the process of structural transformation of our economy and achieving strong and more inclusive growth, thus speeding up our country's economic emergence. In the macroeconomic field, we are exploring alternative solutions to reconcile consolidating macroeconomic stability with social and infrastructure needs. We intend to involve the private sector to a greater extent in the construction of infrastructure through PPPs to enhance the effectiveness of public investment and to better target social expenditure. Regarding reform, our actions will be directed toward those able to concretely improve the business environment, in particular SMEs, and thereby promote investment, employment, and inclusiveness. In 2019, we resolved the problem of the VAT credit, which was weighing heavily on companies' cash flows. We are now committed to reimbursing any credit accumulated over the year and simplifying the VAT system to reinforce its neutrality. A second problem addressed concerns the extension of payment periods, and we have set up an observatory of payment periods and created an electronic platform dedicated to processing complaints from suppliers of public establishments and companies. Regarding access to financing for businesses, and more particularly for SMEs and micro enterprises, we recently launched an integrated business support and financing program focused on three major axes: the financing of entrepreneurship, the coordination of actions in support for entrepreneurship at the regional level; and financial inclusion in rural areas. We have also adopted a National Financial Inclusion Strategy to integrate into the financial system, in addition to the rural populations targeted by the funding support program, populations who have difficulty accessing financial services.

Despite global turmoil, Morocco's economic growth remains constant. What are its key drivers?
Despite global market outlooks and a recurring drought for several years, GDP growth has averaged nearly 4% since 2008. This performance is the result of the increased diversification of our productive base through integrated sectorial policies. For example, the Green Morocco plan has made our agriculture less dependent on the vagaries of the climate by developing new, high value-added sectors. Meanwhile, the Industrial Acceleration plan has encouraged the emergence of new export sectors with higher technological content, notably in the automotive, offshore, aeronautics, and electronics sectors. As such, automotive production reached 402,000 units in 2018, as compared to 10,000 vehicles in 2004, with a local integration level of more than 50% and a market share of nearly 40% at the level of the African continent. And in order to reduce our energy dependency, we have made significant progress in renewable energy programs, raising the share of renewable energy to around 34% of installed electrical power, with a 2030 target of 52%. Reducing debt and public spending and balancing the deficit are among the objectives of the new finance bill.

How will the government ensure the achievement of these objectives?
The maintenance of macroeconomic balances is the subject of continuous efforts to control expenditure, improve the yield of tax revenues, and mobilize non-tax revenues. Thus, within the framework of the 2020 budget bill, we will pursue these efforts through rationalization of public expenditure; improving the efficiency of investment expenditure; increasing the mobilization of tax and customs revenues; improving the governance and transparency of public institutions and companies; and introducing new financing mechanisms to reduce the treasury's debt. Simultaneously, the government has committed itself to pursuing structural reforms to strengthen its productive base, making it possible to control the budget deficit and sustain growth, thereby reducing recourse to debt. These reforms will focus on a tax reform, implement provisions of an organic budget law and strengthen the correlation between performance and evaluation and accountability principles, implement a new approach to the management of public investment projects, ensure that investment projects are chosen on the basis of their social and economic impact, and look into the pension system.