The budgetary discipline in Morocco and the low equilibrium trap
The use of threshold effects in the implementation of budget policy, enroll in a logic of economic and social policies evaluation. The presence of threshold effects suggests the coexistence of different budget regimes conditional on the budget deficit and public debt. The budgetary discipline imposed to the Moroccan public finances since the 80s, may be counterproductive and harmful to the Moroccan economic growth. The objective is not to propose optimal debt and budget deficit rates, but to show the importance of establishing a flexible budgetary rule that takes into account the economic and social realities of the Moroccan economy.
Public finance management through rigour (prudential accounting logic), condemns budgetary policy in Morocco to achieve a low level of economic growth, thus leading to a low equilibrium ?
On the budgetary level, compliance with the 3% rule, generates specific problems. The reduction of public deficits in bad economic situation cannot be an indication of the efficiency of economic policy. That rule is an arbitrary and counterproductive one, which limits any action of resource allocation and redistribution to mitigate the worsening of social inequalities. Therefore, is the government action reduced to an accounting management centered on the balance of public finances.
Threshold effects suppose the non-linearity in terms of budget policy and the lack of the "one best way" in the setting of the country’s budget policy. We will, thus, use a robust econometric model for determining budget deficit and public debt thresholds wherefrom economic growth reacts differently to the fiscal policy. These thresholds are 4,6% for the budget deficit and 63,73% for the total debt of the treasury.
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