Morocco pushes business-friendly image with new budget

Significance

Morocco’s reputation among international investors as one of the region’s more business-friendly locations has been underlined by a steady rise in the World Bank’s ‘Doing Business’ rankings. The government has sought to reinforce this through the latest budget, including tax cuts for domestic industries. Beyond that, it also includes increases in spending on health and education, as well the creation of a special fund for small businesses. Rabat plans to issue a sovereign bond in the next few weeks to bolster foreign exchange reserves and to finance part of the deficit.

Impacts

• The boost to health and education is in keeping with the king’s recent call for economic policies that will reduce social inequality.
• The bond issue will offer an acceptable level of risk for most prospective investors.
• Popular perceptions of a rigged system, despite positive indications of economic performance, may drive further protests.