Casablanca – Morocco’s public finances in 2025 reflect a complex balance between fiscal consolidation, rising operating costs, and sustained investment efforts. Newly released data from the Kingdom’s Treasury, the Ministry of Economy and Finance, and the Court of Auditors show that while the budget deficit narrowed and revenues grew strongly, the public wage bill continued to absorb a dominant share of government spending.

Wage bill remains the main spending driver

Wages and salaries accounted for 54.7% of total public expenditure in 2025, confirming their position as the largest single item in the state budget. Total operating spending reached about $33.9 billion, of which wage-related costs alone amounted to roughly $18.5 billion, marking a year-on-year increase of 9.2%.

This steady rise highlights the structural pressure of the public payroll on government finances, even as authorities seek to maintain budgetary discipline and preserve room for investment.

Subsidies fall sharply, easing fiscal pressure

In contrast to the rise in wage spending, subsidy expenditures declined significantly. Compensation costs fell by 32.2% to around $1.7 billion, reflecting lower energy and food support needs compared with previous years. This reduction played an important role in easing pressure on the budget and contributed to improved fiscal balances.

Investment spending expands

Public investment continued to grow in 2025. Equipment spending increased by 14% to approximately $8.3 billion, while joint expenditures rose by 15.8% to about $5.2 billion. In total, investment spending reached around $12.9 billion, exceeding the targets set in the 2025 Finance Law, with an execution rate of nearly 119%.

This expansion reflects the government’s commitment to supporting infrastructure development, regional projects, and long-term growth, even as it manages fiscal constraints.

Revenues exceed expectations

Government revenues performed strongly in 2025. Total revenues, net of refunds and tax relief, reached more than $43.7 billion, achieving over 107% of the level forecast in the Finance Law and representing a year-on-year increase of 14.2%.

Tax revenues alone exceeded $35.3 billion, up 14.7%, while non-tax revenues reached about $8.0 billion, reflecting growth of 13.6%. This strong revenue performance outpaced the rise in spending and played a central role in reducing the budget deficit.

Budget deficit narrows, debt ratio declines

The budget deficit stood at approximately $6.2 billion in 2025, equivalent to 3.5% of gross domestic product. This outcome was in line with the government’s target and represented an improvement of 0.3 percentage points compared with 2024.

The deficit reduction was accompanied by a continued decline in the Treasury debt ratio, which fell to about 67.2% of GDP. This trend reflects the combined effect of higher revenues, controlled spending growth, and favorable macroeconomic conditions.

Ordinary balance posts a surplus

Ordinary expenditures reached about $36.0 billion, with an execution rate of 98.5%. The increase in these expenditures was driven mainly by higher spending on goods and services, which rose by 15.7%, and by a 22.3% increase in debt interest payments. However, these pressures were offset by strong revenue growth and the sharp decline in subsidy costs.

As a result, the ordinary budget balance recorded a surplus of nearly $7.8 billion, up from about $6.4 billion a year earlier, reinforcing the overall improvement in fiscal performance.

Tax refunds and exemptions rise

The share of the general budget allocated to tax exemptions, reductions, and refunds increased by 12.3% in 2025. This was mainly driven by higher domestic value-added tax refunds, which exceeded $1.4 billion, and by corporate tax refunds of about $0.35 billion.

While these measures support liquidity in the private sector and improve the business climate, they also represent an ongoing cost to the state that must be balanced against revenue mobilization goals.

Broader economic context: Growth and stability

According to the Court of Auditors’ annual report for 2024–2025, Morocco’s economy grew by 3.8% in 2024, outperforming global growth of 3.3%. This performance was driven mainly by non-agricultural sectors, which compensated for the decline in agricultural output caused by persistent drought.

Inflation slowed sharply to 0.9% in 2024, down from 6.1% the previous year, helping to stabilize household purchasing power and ease pressure on public finances. These favorable macroeconomic conditions supported revenue growth and contributed to improved fiscal outcomes.

Health, education, and social protection under scrutiny

Public spending priorities extended beyond fiscal consolidation. The health sector budget reached approximately $3.4 billion in 2025, up from around $2.0 billion in 2019, and the number of doctors exceeded 32,000. Despite these gains, the Court of Auditors highlighted persistent challenges related to staffing, hospital infrastructure, and governance.

In education, progress was noted in school enrollment, particularly in rural areas, but structural issues remain in learning quality, teacher training, and system governance. The Court called for stronger local governance and better coordination among stakeholders to improve outcomes.

The generalization of mandatory health insurance, a cornerstone of Morocco’s social protection reform, also requires further measures to control costs, diversify funding sources, and ensure long-term financial sustainability.

Regional disparities and investment climate

The Court of Auditors also emphasized that advanced regionalization remains an unfinished project. Three regions still account for nearly 58.5% of national GDP, and two-thirds of industrial zones are concentrated in just five regions. Although the program to reduce territorial and social disparities—worth about $5.2 billion—completed over 80% of planned projects, many were focused on rehabilitation rather than infrastructure expansion, limiting their long-term impact.

On the investment front, reforms aimed at improving the business climate have delivered progress, particularly under the 2023–2026 roadmap. However, structural constraints persist, including land mobilization, production costs, and access to financing. The Court recommended adopting a formal national investment strategy and accelerating the establishment of a National Investment Observatory to improve monitoring and policy evaluation.

Accountability and governance

Between 2024 and 2025, financial jurisdictions imposed fines and ordered reimbursements against public managers for breaches of management rules, and referred 20 cases with criminal aspects to judicial authorities. Compliance with mandatory asset declarations ranged from 86% to 100%, depending on the category of officials, prompting calls for a unified legal framework to strengthen transparency and prevent corruption.

Outlook

Morocco’s 2025 public finances reflect a cautious but improving fiscal position. Strong revenue growth, declining subsidies, and controlled investment spending have contributed to a narrower deficit and a lower debt ratio. At the same time, the continued dominance of the wage bill underscores the structural challenges facing budget management.

As the country pursues major reforms in social protection, regional development, health, education, and investment policy, maintaining fiscal sustainability while meeting growing social and economic needs will remain a central policy challenge in the years ahead.