July 6, 2020 / 6:04 PM / a month ago

Morocco's 2020 budget review sees fiscal deficit at 7.5%, growth at -5%

FILE PHOTO: People shop at a vegetable market on the outskirts of Casablanca, Morocco, October 23, 2019. REUTERS/Youssef Boudlal/Illustration

RABAT (Reuters) - Morocco’s review of the 2020 budget expects the fiscal deficit at 7.5% and growth at -5% on the back of the coronavirus outbreak, the Royal cabinet said on Monday.

The draft budget, which will be later submitted for parliament’s approval, was examined at a ministerial council chaired by King Mohammed VI.

It provides for measures to shore up economic activity including an interest rate cap of 3.5% for state-guaranteed loans to both private and public enterprises and incentives for companies to keep staff, the cabinet said in a statement.

Morocco’s economy grew only 0.1% in the first three months this year before dipping -13.8% in the second quarter as the pandemic affected domestic and foreign demand.

The pandemic affected exports, the tourism sector, remittances from Moroccans abroad and foreign investments, all key to Morocco’s hard currency inflows.

The government has mobilised $4 billion in foreign debt to finance its balance of payments with the Central Bank expecting government debt to surge to 75.3% of gross domestic product in 2020 from 65% in 2019.

The country has reopened most economic activity since late May after a lockdown imposed on March 20. Airports remain close to international passenger traffic.

Reporting by Ahmed Eljechtimi, Editing by Franklin Paul and Giles Elgood

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