IMF thinks Morocco is too hesitant over reforms, Prime Minister says

RABAT Mon Jun 10, 2013 8:59am EDT

Moroccan Prime Minister Abdelilah Benkirane speaks during a May Day rally by his Party for Justice and Development (PJD), in Casablanca May 1, 2013. REUTERS/Youssef Boudlal

Moroccan Prime Minister Abdelilah Benkirane speaks during a May Day rally by his Party for Justice and Development (PJD), in Casablanca May 1, 2013.

Credit: Reuters/Youssef Boudlal

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RABAT (Reuters) - The International Monetary Fund has told Morocco it is too hesitant in implementing reforms to improve its public finances, Prime Minister Abdelilah Benkirane said, but he pledged to move ahead with planned subsidy cuts and other measures.

An IMF delegation is in Morocco, scrutinizing the North African county's finances to see if it is still meeting the criteria of a two-year $6.2 billion precautionary credit line the IMF approved in 2012.

"I have received them (The IMF delegation) and they said that our government is hesitant about reforms," Benkirane told a meeting of his Islamist Justice and Development party (PJD) on Sunday. "I reassured them and I said that we are moving ahead with reforms at the right time," he added, as reported by the PJD's website. "But I can't give you more details."

The IMF is urging Morocco to reform its subsidy and pension systems to cut public spending. The PJD, the biggest party in government, wants to implement reforms but is facing opposition from its coalition partners who fear subsidy cuts and other reforms could provoke unrest.

The disagreement on policy is endangering the unity of the coalition and has already pushed back subsidy reforms, which had been due to start this month.

Morocco's junior government party, the conservative Istiqlal, is threatening to quit the coalition unless Islamist premier Benkirane moderates plans for sweeping cuts to food and energy subsidies.

Benkirane insisted the reforms would go ahead.

"If Moroccans see that we are unable to make some reforms, I want to tell them that it will take some time but we are doing it," Benkirane said. "Morocco had been irresolute about the subsidy reform for many years, but I have changed that and have planned the reform at once." But he did not give a timetable for the reforms.

The IMF delegation is due to finish its visit to the Moroccan capital on Wednesday and will release its assessment a few weeks later, sources told Reuters.

The political establishment around King Mohammed is anxious to avoid a drop in living standards and prevent a repeat of street protests seen in 2011, which the king managed to stifle with social spending, harsh policing and constitutional reforms that paved the way for the PJD to come to power.

The coalition parties are waiting for the king's decision on reforms as he retains the ultimate power even though constitutional reforms in the wake of the Arab spring protest in 2011 handed more power to the prime minister.

The monarch has been in France for more than four weeks, according to local media reports, and there has been no official statement to explain his absence.

(Reporting By Aziz El Yaakoubi; Editing by Susan Fenton)

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