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Morocco improving financial services and budget allocations
Source: Global Arab Network in partnership with Oxford Business Group http://www.english.globalarabnetwork.com/201008176926/Economics/morocco-improving-financial-services-and-budget-allocations.html
Source Date: Tuesday, August 17, 2010
Focus: Information Access, E-Participation
Country: Morocco
Created: Aug 18, 2010

Two different reports released this summer that evaluate Morocco’s public finance management have reached similar conclusions about the country’s efforts to improve the delivery of financial services and budget allocations.

The World Bank’s “Public Financial Management Reform in the Middle East and North Africa: An Overview of Regional Experience", released in June, and the African Development Bank’s (AfDB) appraisal report for phase four of the Public Administration Reform Support Programme (PARSP), released in May, both state that the government has made modest but effective progress in advancing its delivery of public services.

Governments throughout the Middle East and North Africa (MENA) region spent €317.5bn in 2007 in delivering policy, regulatory and service functions. In many countries in the region, public finance management reform programmes have been on the agenda for a decade, sometimes longer, according to the World Bank.

In Morocco’s case, the specific objectives of the PARSP, which is managed by the Ministry of Economy and Finance and the Ministry of Public Sector Modernisation and supported by the AfDB, the World Bank and the EU, include improving government efficiency in budget and human resource management, controlling the civil services’ wage bill, and streamlining administrative procedures by developing electronic government services, according to the AfDB report.

The PARSP, now in its fourth phase, is intended to improve Morocco’s investment climate and attract foreign investors. It is being financed by a €100m loan from the AfDB, a €73.7m loan from the World Bank and another €73m grant from the EU. The AfDB’s €100m contribution will be used to cover the widening budget deficit in 2010, which, according to the AfDB report, was caused mainly by government measures to stave off effects of the global financial crisis.

Indeed, after excellent public finance performance in recent years, the government’s budget position worsened in 2009, due mainly to an expansive policy to maintain growth amid sluggish exports. Overall, however, ongoing structural reforms of the public sector, which are associated with PARSP, have contributed to strong economic growth over the past decade, minus the recent financial crisis, the World Bank report notes. Morocco scores among the highest in the MENA region on budgetary and financial management performance, although, as has been the case with countries around the world, the global financial crisis has resulted in a need for extraordinary government action.

Since 2003, when the World Bank’s Country Financial Accountability Assessment gauged Morocco’s public financial management fiduciary risk as low, the country has continued to improve revenue management and institute stricter control of the civil service payroll. This has been done, the World Bank notes, despite higher international fuel and food prices during the mid- to late-2000s.

Morocco’s fiscal targets for 2009, for example, were all achieved, including a budget deficit of no more than 3% of GDP, public debt of no more than 60% and a civil service wage bill of less than 10% of GDP. In 2009 Morocco’s growth rate stood at nearly 4.9%, down only slightly from 2008’s level of 5.6%, a result of the strength of its economy.

In early July Salaheddine Mezouar, the minister of economy and finance, told media that Morocco's economic growth should exceed 4% this year, although it will also see a 4% deficit as a result of an increased fuel subsidy bill.

The World Bank report does, however, note areas where services can be improved. Though Morocco has consistently performed above the MENA region average in most measures of governance, including scoring well on the quality of public administration, its major weakness is insufficient accountability. The Global Integrity Index, put out by the international NGO Global Integrity, gave the country a disappointing overall rating in 2008, emphasising issues such as limited citizen access to information and poor regulations governing the budgetary process.

The World Bank’s report also notes that fiscal transparency is “reasonable” but that “the scope of the budget needs expansion. Budget execution and accounting procedures are cumbersome and need streamlining.” And while overall budget information is available to the public, the report notes, in practice it is not easy to access.

Efforts are under way to change this, however, with the “Maroc Numeric 2013” programme set to establish 89 new online services by 2013, local media reported in July. The strategy, funded with Dh5.2bn (€465.1m) from government and banking institutions, aims to bridge the gap between government and citizens, particularly in regards to public services, and should help to mirror the larger goals of the PARSP.

"The public sector will gain hugely in terms of efficiency and effectiveness with the introduction of [e-government] services, with simpler automated processing of information," Mohamed Benmahjoub, an advisor to the minister of industry trade and new technologies, told local media. The plan is expected to add some Dh27bn (€2.4bn) to GDP and create 26,000 new jobs.

Morocco’s public finance management reforms have managed to implement a number of modest but effective changes. With further work under the PARSP and an increased focus on providing e-government services, efforts to increase transparency and efficiency of public financial services will likely increase further, or at least continue at a steady pace. If the fourth phase of the PARSP finishes as planned, the country is also likely to see improved transparency in human resources and public administration.
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