MOROCCO

The 2011 constitution established the Kingdom of Morocco as a constitutional, democratic, parliamentary and social monarchy. The king is the head of state. The head of government is the prime minister, appointed by the king based on the results of the elections to the House of Representatives. The parliament includes two chambers: The House of Representatives whose members are elected by direct universal suffrage for a 5-year mandate and the Chamber of Councillors whose members are elected indirectly by local and national electoral colleges for a 6-year mandate. Three-fifths of the members of the Chamber of Councillors represent subnational governments. The number of councillors by region is determined according to its population. One-third of members is elected at the level of each region by the Regional Council from among its members. The remaining two-thirds are elected by an electoral college by the members of the communal, prefectural and provincial councils in each region. The New Development Model published in 2021 lays the foundations for a balanced territorial development, reflecting on the ground the choice of regionalisation progress, through the process of decentralisation and deconcentration.

According to Article 1 of the Constitution, “the territorial organisation of the Kingdom is decentralised, based on advanced regionalisation”. Title IX (Articles 135 to 146) is entirely dedicated to “regions and local authorities” and article 136 recognises local self-government: “the territorial organisation of the Kingdom is based on the principles of free administration, cooperation and solidarity”. The constitution establishes a three-tier subnational system including the regions at the higher level, prefectures (urban areas) or provinces (rural areas) at the intermediate level and municipalities (communes) at the lower level. Regions, as self-governing entities, are new in the Moroccan multi-level governance system. The 2011 Constitution introduced direct elections for regional councils, which were formerly appointed by central authorities.

The Moroccan decentralisation reform is based on the concept of “advanced regionalisation” (regionalisation avancée), developed by a regionalisation consultative commission (Commission Consultative de la Régionalisation) assigned in 2010 by the king with drafting the reform. The reform is the cornerstone of a new socioeconomic model of development and puts regions at the centre of implementing territorial development policies. This regionalisation process also leads to a redefinition of the relationship between the central and regional governments. Regions now have exclusive, shared and transferred competences as well as human and financial resources. In September 2021, Morocco held the most recent legislative, regional and municipal elections, which aim to provide regional councils with more autonomy.

In addition to decentralised institutions at subnational level, the state still has a deconcentrated administration at each territorial level (see below).

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL
Municipality (Commune Urbaine et Commune Rurale) )الجماعة الحضرية و الجماعة القروية(	Prefecture and Province (Préfecture et Province) )عمالة و إقليم(	Region (Région) (جِهَة)

OVERALL DESCRIPTION: The Kingdom of Morocco is divided into regions, intermediate-level governments including prefectures and provinces, and municipalities (communes). All these entities have a deliberative body called a council (regional, provincial/prefectural and municipal) whose members are elected through direct and universal suffrage for six year terms. They are headed by a president elected by the councillors. Three organic laws were adopted in June 2015 to define more precisely the territorial organisation and division of powers: the Organic Law No. 111-14 regarding regions, the Organic Law No.112-14 concerning prefectures and provinces and the organic law no. 113-14 on municipalities.

REGIONAL LEVEL: The current number of regions results from a new division of the territory, which reduced their number. Regions are quite diverse in terms of geographic and demographic size and wealth. In 2019, 58% of national wealth was concentrated in the three regions of Casablanca-Settat, Rabat-Salé-Kénitra and Tanger-Tétouan-Al Hoceima. Disparities in terms of regional GDP are large and increasing. The Organic Law No111-14 regarding regions defines a region as one of the territorial subdivisions of the Kingdom. It is a territorial legal authority under public law, which benefits from administrative and financial autonomy. It constitutes one level of the decentralised territorial organisation in the Kingdom, based on the new reform of advanced regionalisation. This reform establishes the region as a relevant framework for the deployment of territorial policies.

INTERMEDIATE LEVEL: As determined by the Organic Law No.112-14, prefectures and provinces form, at the territorial level, an intermediate level between the regions and the municipalities. Prefectures are found in urban areas, while provinces comprise rural districts. They are managed by a council, which is elected through an indirect ballot and made up of the councils of the municipalities’ members, manages this level of territorial organisation in accordance with the principles of free administration and governance.

MUNICIPAL LEVEL: Municipalities are very diverse. The average size of municipalities is large (around 23 235 inhabitants). Morocco also has a network of around 25 000 villages and rural localities, which do not have a legal personality. The most populated municipalities in 2022 are estimated to be Casablanca, Marrakech, Tangier-Assilah, Fez and Kenitra. They are each managed by a municipal council and subdivided into districts. They may not have legal personality but they do have administrative and financial autonomy, as well as borough councils. The region ‘Casablanca-Settat’ is the most populated region (7.4 million inhabitants estimated in 2020, equivalent to more than 20% of the national population). Municipalities are managed by a Municipal council, whose members are elected by direct universal suffrage for a six-year mandate. The number of Municipal Councillors to be elected varies from 11 to 61, depending on the number of inhabitants of the municipality. For those with arrondissements, this number varies from 81 to 131.

STATE TERRITORIAL ADMINISTRATION: The central government has also a deconcentrated administration at each territorial level, headed by a wali at regional level, a governor in the prefecture or province and a pacha (urban municipality) and head of circle (rural municipality). Walis and governors are appointed by the King.

The assignment of responsibilities is based on the principles of subsidiarity (Art. 140 of the 2011 Constitution), solidarity (among municipalities and regions) and cooperation (at the national and international levels) as well as accountability, evaluation and control. In principle, all local authorities are responsible, in their respective area, for planning, programming and promoting the economic, social and cultural development of their constituency.

According to 2015 organic laws, subnational governments have three types of responsibilities: exclusive, shared and transferred. Exclusive competences refer to responsibilities exercised exclusively by each level of subnational government. Shared responsibilities are those exercised under contract schemes between subnational governments and the central government. Transferred competences relate to those responsibilities that are transferred by the state, based on the principle of subsidiarity. Under Art. 140 of the 2011 Constitution, the central government decides which competences can be transferred to local government. Any transfer of competences must be accompanied by a transfer of the subsequent resources required to carry them out.

The regions are mainly considered "areas of social and economic development". They are in charge of designing regional economic, social and land use strategies and plans. In particular, regions have to develop their Regional Development Plans (RDP) and create Regional Agencies for Projects Implementation (AREPs). The prefectures and provinces are responsible for promoting social development, particularly in rural areas. They are also in charge of enhancing efficiency, solidarity and cooperation between the municipalities located in their respective territories. Municipalities are in charge of delivering local services to citizens and promoting local development. Several large cities have created local development companies (Société de Développement Locale - SDL) as a new mode of management of local public services (e.g., Casa Transport set up in 2008 to operate the tramway).

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Regional level	Intermediate level	Municipal level
1. General public services (administration)	Internal administration	Internal administration	Internal administration
2. Public order and safety			Ambulance and emergency services
3. Economic affairs / transports	Regional economic development; Rural development (agricultural centres); Promotion of tourism; Developing a regional transport plan; Developing a regional development plan; Non-farming activity and maintaining unclassified roads; Promotion of energy efficiency.	Construction and maintenance of prefectural and provincial roads and maintenance of rural tracks;Development of mountainous and oasis areas;Rural economic development;Public transport;Building and maintaining small- and medium-sized hydropower structures.	Local economic development and employment and support to economic activities and enterprises; Markets and fairs; Slaughterhouses and transport of animals;Local roads;Public transport; Local tourism.
4. Environment protection	Management of natural resources, Management of regional protected parks and forests aCombating pollution anddesertification	-	Protection of environment;Contribution to costal management;Parks and green areas.
5. Housing and community amenities	Electrification and drinking water supply to remote villages;Promotion of social housing;Development of a regional strategy for water and energy.	Detecting the population’s housing needs;Rural access to water and electricity (shared).	Urban and regional planning and the development of a local plan; Electricity distribution; Public lightning; Maintenance of cemeteries and burial grounds; Waste collection;Cleaning of public piiiiqlace.
6. Health		Detecting the population’s needs related to health, prevention and hygiene.Rural healthcare upgrade (shared);	Local clinics and healthcare centres.
7. Culture & Recreation	Promotion of sports and recreation;Preservation of archaeological and heritage sites;Promotion of festivals and events; Maintenance of monuments, management of cultural institutions	Detecting the population’s cultural and sport needs.	Preservation of local culture and cultural activities; Management of social-cultural and sport facilities;Camping areas and recreational spaces;
8. Education	Vocational training, continuing education and employment;	Detecting the population’s education needs; School transport in rural areasEducation upgrade (shared)	Primary and basic education (building schools)
9. Social Welfare		Social development;Reducing povertySocial upgrade (shared)

Scope of fiscal data: Regions, Prefectures, Provinces and Municipalities.

Other

Availability of fiscal data: Medium

Quality/reliability of fiscal data: Medium

GENERAL INTRODUCTION: According to article 141 of the Constitution, subnational governments are financed through financial resources transferred by the central government and by their own revenues. The same article states that any transfer of responsibilities from the state to the local authorities must be accompanied by a transfer of the corresponding resources. An important fiscal reform was launched in 2007 with the enactment of Act no. 47-06 on subnational government taxation, supplemented by Law 39-07, which distinguishes between the regional, provincial and prefectural, and communal taxes. A new local finance law was adopted in 2009 to modernise the local finance system. This legal package was supplemented by fiscal provisions in the 2015 Organic Law 111-14 on regional governments.

Subnational government expenditure by economic classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	268	3.6%	11.7%	100%
Inc. current expenditure	165	2.2%	9.9%	61.7%
Compensation of employees	83	1.1%	9%	30.9%
Intermediate consumption	7	1%	17.9%	28.1%
Social expenditure	-	-	-	-
Subsidies and current transfers	-	-	-	-
Financial charges	7	0.1%	3.7%	2.7%
Others	-	-	-	-
Incl. capital expenditure	103	1.4%	16.6%	38.3%
Capital transfers	-	-	-	-
Direct investment (or GFCF)	-	-	-	-

EXPENDITURE: Subnational government expenditure remains low, at only 11.7% of public expenditure and 3.6% of GDP in 2020. This ratio did not evolve, despite the ongoing decentralisation process (public expenditure and percentage of GDP were equivalent to 11.8% and 3.4% respectively in 2016). Staff expenditure accounts for less than one-third of subnational government spending. It constitutes a significant share of the municipal budgets, as well as prefectures and provinces (48.3% and 39.2% respectively). The share of subnational governments in public staff spending remains low and only increased by 0.2%, compared to 2016.

DIRECT INVESTMENT: Recent data is not available on direct investment.

ⓘ No detailed data available for this country

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	257	3.4%	15%	100%
Tax revenue	207	2.8%	14.6%	80.6%
Grants and subsidies	28	0.4%	-	10.8%
Tariffs and fees	15	0.2%	-	5.7%
Income from assets	7	0.1%	-	2.8%
Other revenues	0	0%	-	0%

OVERALL DESCRIPTION: Subnational government revenue represented 3.4% of GDP and 15% of public total revenue in 2020. Grants and subsidies represented 10.8% of subnational government revenues, while tax revenues accounted for 80.6%.

TAX REVENUE: Subnational government taxes are made up of shared taxes with the central government (75% of subnational government taxes) and own local taxes (25%). Subnational governments have power on the tax base and tax rate of local taxes. Three taxes are collected by the General Tax Administration: the residence tax also called “urban tax” (taxe d’habitation), the tax on municipal services (taxe sur les services communaux) and the professional tax (taxe professionnelle). Municipalities directly levy and collect two other taxes related to property: the tax on undeveloped urban land and the tax on the construction of buildings and related infrastructure. These five taxes form the recurrent taxes on immovable property. Other taxes managed by subnational governments include municipal taxes (e.g., beverage tax, tourist tax, tax on bottled water, tax on public transport, tax on extraction activities in quarries); prefectural/provincial taxes (driver's license tax, tax on vehicle inspections, tax on the sale of forest products); and regional taxes (tax on hunting permits, mining tax, tax on port services).

In 2020, the Law No. 07.20 on local taxation was published, which amends and supplements Law No. 47.06 on local taxation. Its main objective is to increase local authorities’ own resources, to widen the tax base, to improve the governance of the subnational fiscal regime, as well as to achieve justice and fiscal equity. The tax on construction of buildings and related infrastructure and the tax on undeveloped urban land will be extended to building restoration projects, rehabilitation of non-compliant buildings and demolitions requiring a building permit. Moreover, the tourist tax will be extended to furnished residences rented online via the Airbnb platform.

GRANTS AND SUBSIDIES: There are two types of intergovernmental transfers: one made up of shares of national taxes, which are redistributed to subnational governments and the other category, which is made up subsidies (Fonds de concours et subventions). All subnational governments receive a share of VAT: 1% for the regions and 30% for the prefectures/provinces and the municipalities. The VAT is however a minor source of revenue for the regions, which have benefited from, since the Organic Law No. 111-14, a more diversified basket of taxes. The law provided for the progressive allocation of the receipts to the regions of at least 5% (2% in 2016) of the personal income tax (PIT), 5% (2% in 2016) of the corporate tax (CIT) and 20% of revenue from tax on insurance contracts. Overall, these three taxes amounted to 36% of regional total revenue in 2016.

Annual distribution to individual subnational governments is formula-based to reduce both vertical and horizontal imbalances. For the municipalities, there are three quantitative criteria: A lump sum part (minimum transfer to all municipalities); a part based on tax mobilisation capacity (redistributive criteria); and a third part based on tax effort (incentive criteria). The share of the VAT transferred to the prefectures and provinces is based on a series of criteria including the annual amount of staff wages and salaries and the size of the population and area.

The Constitution provided for the creation of two regional funds in 2016: (i) a fund for “social upgrading” (fonds de mise a niveau sociale) to alleviate inequalities in human development, infrastructure and equipment, particularly in the areas of drinking water and electricity, housing, health, education, roads and telecommunications; and (ii) a fund for “interregional solidarity” (fonds de solidarite interregionale) to reduce disparities between the regions. 50% of central government’s transfers to the regions are redistributed in equal part to all regions: 35.5% according to regional population and 12.5% according to their area.

OTHER REVENUE: Subnational governments collect charges and user fees for services. They also earn revenue from municipal assets, mainly those generated from real estate and interests generated from treasury funds.

ⓘ No detailed data available for this country

FISCAL RULES: The 2009 Local Finance Law and Decree No. 2-09-441 of 2010 lay down fundamental principles, rules applicable to the execution of revenue and expenditure operations and treasury operations, accounting rules, budget regulation, accountability and control.

DEBT: Local governments are able to contract loans but only from the Municipal Equipment Fund (Fonds d’équipement communal - FEC), which is a public bank supervised by the central government and specialised in subnational financing. Borrowing must be approved by the Minister of the Interior and is reserved for financing investment projects (“Golden Rule”). Additional prudential rules include having a debt ratio below 40%; generating savings and future surpluses that can cover the entire debt service; participating in the financing of the project with a minimum contribution of 20% of its cost; and possessing the human,

material and organisational resources to implement the project.

In January 2022, the Council of Government adopted three decrees (No. 2.22.31, No. 2.22.32 and No. 2.22.33) aimed at amending and updating the rules governing loan operations contracted by regions, provinces and prefectures and municipalities (Decree No. 2.17.294, No. 2.17.295 and No. 2.17.296 respectively). The three decrees set the possibility of issuing debt securities, carrying out securitisation transactions and contracting a loan from international cooperation agencies. The purpose is to support the evolution of the financial sector in Morocco and to open up new prospects for the financing of municipalities, in order to enable them to meet the needs inherent in their development and to contribute to the implementation of the recommendations contained in the New Development Model (NMD).

TERRITORIAL MANAGEMENT OF THE CRISIS: The Municipal Equipment Fund (FEC) launched its Business Continuity Plan (BCP) in March 2020, which enabled it to maintain the bank's activity and respond, in deadlines, to the needs of local authorities in terms of funding mobilisation. The Board of Directors met in May 2020 to approve the payment by the FEC of a contribution of MAD 100 million for the benefit of the special fund for the management of the pandemic linked to COVID-19.

It should ultimately be emphasized that at the end of 2020 the FEC was able to maintain practically the same level of commitments as in 2019 despite the impacts of the health crisis linked to COVID-19 on the volume of local investment by territorial communities. In addition, the health and economic crisis caused by the spread of the COVID-19 pandemic has impacted the pace of implementation of certain financed projects, which have experienced a time slippage in their implementation. To this end, loan disbursements are set at MAD 3 510 for the 2020 financial year, a decrease of 16% compared to 2020. These loan disbursements contributed to the financing of 158 projects covering different sectors of infrastructure and superstructures in both urban and rural areas.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: During the COVID-19 pandemic, subnational governments have developed measures to facilitate access to their services for citizens, while trying to guarantee their protection. Administrative services were digitalised, when the conditions were met, and basic or emergency health services were maintained despite the pressure on the health system. Regions were mobilised in several areas to deal with this crisis through support for businesses and cooperatives via the "Intilaka" program, the consolidation of the social and solidarity economy, tourism support and local development.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: Total subnational government expenditure dropped by 11% in 2020 compared to 2019. This includes a decrease of 21% of direct investments and 19% in subsidies and current transfers. On the other hand, subnational governments’ total revenue decreased by 12% during the same period. This includes a decrease of 19% in tax revenue, 18% in revenue from assets and 9% in grants and subsidies.

Municipalities were significantly impacted by the COVID-19 crisis. As a result, the General Direction of Local Authorities in the Ministry of Interior requested that municipalities limit themselves to compulsory expenditures in 2020. These expenditures include (i) salaries of civil servants, (ii) delegated management fees (water and electricity distribution, cleanliness, public transport etc.), (iii) maintenance costs for essential equipment (e.g. public lighting), (iv) reimbursement of credits, and (v) COVID-19 related expenses (e.g. disinfection, protective equipment etc.).

At the prefecture and province level, the crisis had a significant impact on net savings. However, they were able to maintain a sufficient level of resources to fulfil their functions and honour their debt commitments. Regions were the least impacted by the crisis. They maintained a sufficient level of resources, allowing them to maintain their investments to stimulate the local economy.

ECONOMIC AND SOCIAL STIMULUS PLANS: The Moroccan authorities implemented a recovery plan, which focuses on key strategic sectors (e.g. Global Value Chains, investment, digitisation and health sector). Morocco also engaged a reform of the Regional Investment Centres, which are the main providers of services to entrepreneurs at the regional level, providing financial, legal and technical assistance to SMEs in their creation process, as well as support measures during the pandemic. The Moroccan government also created “l’Agence Nationale de Gestion Stratégique des Participations de l’État” in order to centralise the state’s ownership in public enterprises.