Corruption and pension reform key challenges for Morocco
Agencies in Morocco which scrutinize governance are turning up the heat on Morocco’s controversial Prime Minister who they accuse of failing to provide the silver bullet on reform and the economy.
The Government Action Observatory, affiliated with Al-Hayat Centre for Civil Society Development in Morocco, has warned in a report that reform of the pension system and corruption are key challenges facing Prime Minister Aziz Akhannouch, according to the The Arab Weekly and agencies on October 15th.
The report shines a light on the challenges facing Akhannouch, who already is under pressure over jobs. It states that Morocco’s pension system is at risk of bankruptcy by 2028, while corruption costs the country over 50 billion dirhams annually, hindering economic growth.
The report, titled “Ambitious goals and worrying challenges,” states that graft has reached dangerous levels, with Morocco declining in the Corruption Perception Index from 73rd to 97th place globally within five years, and that Akhannouch’s government has not presented a clear vision to confront corruption.
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The government began a standard reform of the pensions system in 2016 based on three principles: increasing the value of contributions, increasing the retirement age to 65 years and reducing the value of pensions. The observatory says this approach leads to workers and public employees bearing most of the burden of the costs of the reform.
“The Moroccan Retirement Fund is based on distribution, and any decrease in the membership base exposes it to bankruptcy, and any increase would prolong its life,” economic expert Idriss al-Fina told the Arab Weekly. He added that “the government’s approach is successful, but it is not enough,” stating that “the question of governance is the real issue that must be examined, as the fund requires good management.”
Calls for pension reform in Morocco have grown louder following statements on reform made by Minister of Economy and Finance Nadia Fettah in the House of Representatives in early 2024. To confront the risk of the pension system going bankrupt, the government is proposing reforming funds threatened with bankruptcy, to review procedures in the current system and not to re-evaluate pensions over the next decade.
The Central Bank of Morocco confirmed in a report that implementing the decisions related to increasing salaries taken during the last social dialogue session, April 29, 2024, would postpone the depletion of the reserves of the Moroccan Retirement Fund and the Collective System for Granting Retirement Pensions, but would not guarantee their continuity in the long-term.
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The report recommended the introduction of a two-level system both public and private, the strategic guidelines for which were set in the Social Dialogue Agreement. It also stressed that this there should be an allowance for a tariff system for the pension system able to absorb large parts of their previously uncovered obligations.
Arab weekly and agencies
