PLF 2025 report, the main points to remember

As part of the three-year budget plan (PBT) 2025-2027, the government has set itself an ambitious target for reducing the budget deficit. According to the three-year budget execution and macroeconomic framework report relating to the 2025 draft finance law (PLF), the objective is to reduce the deficit to 3.5% of gross domestic product (GDP) in 2025, then to 3% in 2026 and 2027. This report was published on the website of the Ministry of Economy and Finance.

A gradual deficit reduction strategy

The government aims to strike a balance between continuing reforms and strengthening budgetary margins, both in terms of revenue and expenditure. To achieve this objective, it plans to activate several budgetary levers. These actions include:

• Mobilization of tax revenues : Optimization of existing tax mechanisms to maximize state revenues.
• Alternative financing mechanisms : Exploring new sources of financing to reduce dependence on traditional tax revenues.
• Review of the spending strategy : Adjustment of budgetary programming according to medium-term priorities.
• Effectiveness of public investment : Improve investment performance to ensure better use of resources.
• Reform of public institutions and enterprises : Streamline the management of public entities to optimize their contribution to the economy.
• Treasury Debt Management : Implementation of a strategy to ensure the sustainability of public debt.

The executive also intends to strengthen the governance of public finances by reforming the organic law on the finance law. This includes the consolidation of financial principles and rules to ensure the sustainability of debt in the medium term.

PBT: a multi-annual management framework

Since its implementation in 2016, Organic Law No. 130-13 has structured the legal framework for public finances. Among its key provisions is the Three-Year Budget Plan (PBT), which allows for programming over a rolling three-year horizon, updated each year according to changes in the economic situation. The PBT applies to the budgets of ministries as well as to public institutions and companies receiving earmarked revenue or subsidies from the State.

PLF 2025: a changing tax and customs policy

The year 2025 will mark the launch of several major customs and tax reforms, according to the report accompanying the 2025 Finance Bill.

1. Customs and indirect taxes:

• Petroleum product marking device : In collaboration with the Ministry of Energy Transition and Sustainable Development, this system aims to combat fraud in the hydrocarbon sector and respond to tax issues.
• Carbon tax : Introduction of green taxation to adapt customs regulations to climate issues.
• Regulatory framework for precious metals : Continuing the establishment of a regulatory framework for the refining of precious metals and ensuring the traceability of operations.
• Reform of the public debt recovery code (CRCP) : This reform, carried out in consultation with the General Treasury of the Kingdom (TGR), will focus on improving the efficiency of the recovery of public debts.

2. Taxes and duties:

• Income tax reform (IR) : In application of the social dialogue agreement of April 2024, the government is committed to improving the income of employees, particularly those in the middle class. From January 1, 2025, this reform will include:
  • The increase in the first bracket of exempt net income from 30,000 to 40,000 dirhams, leading to the exemption of income below 6,000 DH/month.
  • A review of other brackets to widen and reduce the rates applied, allowing middle-class incomes to benefit from a reduction of almost 50% of the current rate.
  • The reduction of the marginal rate from 38% to 37%.
• Family responsibilities : The annual amount of IR reduction for family expenses will increase from 360 DH to 500 DH per dependent.
• Fight against tax fraud : The strengthening of informal sector integration measures will continue, aimed at ensuring tax fairness and fully mobilizing tax potential.

Economic and budgetary outlook for 2025-2027

The budget execution report consists of three parts:

1. Recent developments in the national economy and prospects for the main macroeconomic indicators.
2. The status of budget execution in terms of revenue, expenditure and debt for 2023 and up to June 2024.
3. Budgetary guidelines and macroeconomic outlook for the period 2025-2027.

With these new measures and guidelines, the government intends to place the management of public finances in a multi-year perspective to guarantee budgetary sustainability, improve the efficiency of public spending and ensure better predictability of the country’s finances.

LNT