Morocco’s 2026 Finance Bill: Budget Deficit Targets 3% of GDP Amid Fiscal Consolidation and Investment Push

Wednesday, October 22, 2025

Moroccan fiscal policy | budget projections | emerging market debt dynamics | infrastructure investment opportunities

The 2026 Finance Bill outlines a projected budget deficit of MAD 55.4 billion (approximately USD 5.5 billion), equivalent to 3% of GDP—down from the 3.5% anticipated under the 2025 Finance Act. This trajectory, detailed in the accompanying Economic and Financial Report from the Ministry of Economy and Finance, underscores Morocco’s commitment to fiscal prudence, enhancing appeal for sovereign debt investors and global fixed-income strategies seeking stability in emerging markets.

Ordinary revenues are forecasted at MAD 432.8 billion, offsetting total expenditures (including autonomously managed state services and Treasury special accounts) of MAD 488.2 billion. For international allocators, this balanced framework signals robust revenue mobilization without compromising growth-oriented outlays.

Tax revenues are projected to reach MAD 366.5 billion, or 20.1% of GDP, sourced from direct taxes (MAD 164.2 billion), indirect taxes (MAD 159.7 billion), customs duties (MAD 18.5 billion), and registration and stamp duties (MAD 24 billion). This composition reflects efficient tax administration and broadening of the base, providing a stable fiscal anchor for equity and bond portfolios exposed to Moroccan corporates.

Non-tax revenues, comprising 14.5% of total ordinary receipts at MAD 62.7 billion, will derive primarily from public enterprise and establishment contributions (MAD 27.5 billion), innovative financing mechanisms (MAD 20 billion), and state equity divestitures (MAD 6 billion). Such diversified inflows mitigate reliance on traditional taxation, offering upside for private equity funds eyeing privatization opportunities and PPP structures.

Total expenditures are set at 26.8% of GDP, channeling resources into structural megaprojects while advancing social state consolidation and government program priorities. This allocation balances immediate welfare needs with long-term competitiveness, aligning with ESG mandates for institutional investors.

Goods and services spending is budgeted at MAD 324 billion (17.8% of GDP), encompassing operational efficiencies that support private sector productivity. The wage bill, projected at MAD 195.3 billion (10.7% of GDP), marks a 0.2 percentage point decline from 2025 estimates, factoring in new hires, scale adjustments, promotions, and social dialogue outcomes—demonstrating controlled public sector costs that preserve fiscal headroom.

Allocations for other goods and services stand at MAD 128.7 billion, bolstering transfers and subsidies to fortify social sectors like education and health, while facilitating structural reforms, including social protection enhancements. This emphasis on human capital investment positions Morocco as a resilient growth story for global funds targeting demographic dividends.

Debt interest servicing is forecasted at MAD 41.6 billion (2.3% of GDP), reflecting a 0.9% reduction in domestic debt costs and a 6.9% drop in external obligations—tailwinds from favorable borrowing dynamics that compress yields and attract foreign bond inflows. Compensation expenditures, at MAD 13.9 billion (0.8% of GDP), continue to shield vulnerable households from commodity volatility, stabilizing consumption patterns critical for consumer-facing equities.

Investment outlays receive a robust MAD 114.8 billion allocation, up 8.8% from 2025 projections and equating to 6.3% of GDP. This escalation sustains public investment momentum toward integrated development initiatives that address territorial and social disparities, accelerate flagship infrastructure projects, and underpin sectoral strategies—creating compelling entry points for infrastructure debt and equity vehicles amid Morocco’s export and tourism resurgence.

For foreign institutional investors, the 2026 Finance Bill reaffirms Morocco’s trajectory toward sub-3% deficit normalization, fostering a low-risk environment that enhances the Casablanca Stock Exchange’s yield profile and supports currency stability. Amid recent CPI moderation to 0.4% annually, these measures collectively bolster real return potential across fixed-income, equities, and alternatives.