RABAT- Morocco plans to reform, merge or dissolve some state bodies to reduce their dependency on a state budget hit by the coronavirus pandemic, the finance minister said on Wednesday.

The plan could include a merger of the indebted state railway operator, ONCF, and the highway company ADM into a single entity, the minister, Mohamed Benchaaboun, told reporters.

Morocco expects its economy to shrink by 5% this year, with the fiscal deficit rising to 7.5% of gross domestic product and treasury debt to 75.3% of GDP. Despite a tough lockdown, it has confirmed 26,196 cases of the coronavirus.

The state has already announced some measures to help with the economic impact. Last week, King Mohammed VI announced a $12.8 billion stimulus, equivalent to about 11% of GDP.

The stimulus includes 75 billion dirhams ($8 billion) in state-guaranteed loans to private and public enterprises and 45 billion dirhams as a strategic investment fund to finance public-private projects, Benchaaboun said.

State airline RAM will receive 6 billion dirhams, of which 60% is a direct capital injection and 40% loans guaranteed by the state.

Morocco’s plan to generalize social security in five years would guarantee health insurance, retirement pensions and unemployment compensation for everyone, he said.

More than a third of Moroccan workers already work in unregistered businesses without social protection, doing manual labour or selling in the streets, accounting for 14% of GDP, according to the planning agency.

Unemployment is expected to surge to 14.8% in 2020 from about 9.2% before the pandemic, the agency said.

Morocco intends to issue an international bond this year. "All preparations have been made," he said ,without offering further details.

(Reporting by Ahmed Eljechtimi, editing by Angus McDowall and Larry King) ((ahmed.eljechtimi@thomsonreuters.com;))