Morocco’s 2027 budget faces test of PAM’s economic promises

Morocco’s 2027 finance bill is emerging as the first major economic test for the country’s new political configuration. With the draft budget required to reach Parliament by October 20, the incoming government faces a narrow window to translate the election campaign’s promises into concrete fiscal measures.

The timing is particularly challenging. The legislative elections held on September 23 reshaped the parliamentary landscape, with the Party of Authenticity and Modernity (PAM) securing 97 of the 395 seats. Yet the formation of a governing majority still depends on coalition negotiations. Government Chief-designate Fatima-Zahra El Mansouri is currently holding talks with political parties to assemble her cabinet.

At the same time, preparations for the 2027 Finance Bill are already well advanced. The next government will therefore have to reconcile an established budgetary process with a political mandate built around purchasing power, tax reform and stronger social protection.

A first opportunity to define the new government’s economic direction

Economist and public policy specialist Abdelghani Youmni, speaking to Hespress Fr, describes the 2027 Finance Bill as the first major economic and fiscal statement of the new legislative term.

The budget will do more than allocate public resources. It is expected to provide an early indication of how the new majority intends to address the pressures facing Moroccan households while maintaining fiscal stability.

Over the next five years, the government will face several simultaneous challenges, including employment, household purchasing power, social reforms and preparations for the 2030 World Cup, which Morocco will co-host with Spain and Portugal.

For Youmni, the central issue is not simply the scale of public investment but how economic growth translates into broader social gains. The first budget of the new legislature could therefore become a test of whether the government can turn the concepts of social and economic justice into measurable policies.

Income tax reform at the heart of the purchasing-power debate

Among the PAM’s campaign proposals, personal income tax reform stands out as one of the measures with the most immediate potential impact on household finances.

The party proposed restructuring the existing income-tax system by reducing the number of salary brackets from six to three. Under the proposed framework, gross monthly salaries below 15,000 dirhams would face a zero rate, income between 15,000 and 46,000 dirhams would be taxed at 10%, while earnings above that threshold would be subject to a marginal rate of 20%.

Such a restructuring would represent a significant shift in Morocco’s income-tax policy. According to Youmni, the measure could cost the state around 30 billion dirhams annually.

The economist nevertheless argues that the fiscal impact could be partly offset by stronger household consumption and the resulting increase in value-added tax revenues. He estimates that the reform could be accommodated without significantly widening a budget deficit expected to remain in the range of 3.6% to 4% of GDP.

The potential effect would extend beyond immediate consumption. Additional disposable income could allow households to increase spending on education, housing and healthcare, while also creating greater room for savings.

In that sense, an income-tax reduction could become both a social policy and an economic stimulus, provided the government succeeds in balancing its cost against the broader effects on domestic demand.

Energy policy could provide another quick signal

Fuel prices represent another area where the new administration could seek to demonstrate an early commitment to purchasing power.

The PAM’s programme includes a proposal to increase Morocco’s strategic petroleum reserves to the equivalent of three months of national consumption. Such a policy would aim to strengthen the country’s ability to withstand international supply disruptions and sudden movements in global energy prices.

In the shorter term, Youmni suggests that the government could consider making greater use of existing strategic stocks to ease pressure on pump prices for diesel and gasoline.

Lower fuel prices could have consequences beyond motorists. Transport costs feed into the wider economy, influencing inflation, household expenses and business operating costs. Any reduction could therefore provide a broader signal on the government’s approach to inflation and purchasing power.

Agriculture faces a test of policy effectiveness

Agriculture is another area where the new government could be pressed to demonstrate that public spending is producing tangible results.

The debate, according to Youmni, should move beyond the amount of money allocated to the sector and focus increasingly on the economic and social outcomes generated by government support.

This includes examining subsidies, tax incentives and other support mechanisms against indicators such as food prices and farmers’ incomes.

The pressure is particularly visible in the livestock and agricultural markets. The doubling of red-meat prices over five years, alongside rising prices for agricultural products, has intensified concerns about the effectiveness of existing support policies.

For policymakers, the challenge is therefore twofold: protecting agricultural producers while ensuring that consumers do not bear an increasingly heavy cost.

Youth unemployment remains a critical challenge

The budget debate also comes against a difficult employment backdrop.

Morocco’s national unemployment rate stood at 13% in 2025, according to the figures cited by Youmni, while unemployment among people aged 15 to 24 reached 37.2%, compared with 9.5% in 2021.

The situation among young people is particularly significant because the PAM’s programme highlights approximately 2.9 million Moroccans aged between 15 and 29 who are neither employed nor enrolled in education or vocational training.

These figures put employment policy near the centre of the new government’s economic agenda. Tax relief and stronger purchasing power may stimulate demand, but the longer-term challenge will be to create productive and sustainable jobs capable of absorbing a growing generation of young Moroccans.

A narrow window before the budget reaches Parliament

The political transition gives the incoming government little room for delay. Coalition negotiations and cabinet formation are taking place while the 2027 budget preparation process is already underway.

That makes the Finance Bill a particularly important early test of the new administration’s ability to move from electoral commitments to public policy.

The key question will not only be how much Morocco spends, but where it directs its resources, how it finances new commitments and what measurable results it expects in return.

For the PAM, the 2027 budget could therefore become the first concrete demonstration of whether its campaign promises on taxation, purchasing power, energy, agriculture and employment can be converted into a coherent economic programme while preserving fiscal stability.