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|08 November, 2018

Morocco to sell La Mamounia hotel, power plant to cut 2019 budget deficit

Morocco plans to sell the five-star La Mamounia hotel in Marrakech and the Tahaddart power plant in a privatisation push

Pianist Issam plays at Rick's Cafe in Casablanca in this picture taken February 27, 2008. Image for illustrative purposes.

Pianist Issam plays at Rick's Cafe in Casablanca in this picture taken February 27, 2008. Image for illustrative purposes.

REUTERS/Rafael Marchante

RABAT- Morocco plans to sell the five-star La Mamounia hotel in Marrakech and the Tahaddart power plant in a privatisation push to rein in the budget deficit in 2019, the government spokesman said on Thursday.

The government approved a draft law allowing the sale of the two companies, Mustapha El Khalfi told a news conference.

Morocco's 2019 draft budget aims to raise 5 billion to 6 billion dirhams ($527 million-$633 million) from selling state assets to cut the deficit to 3.3 percent of gross domestic product next year. The deficit is forecast at 3.8 percent in 2018.

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La Mamounia is 60 percent owned by state rail firm ONCF, with the rest equally split between state fund CDG and Marrakech city council.

The 384 megawatt (MW) Tahaddart combined-cycle power plant, which lies 30 km (19 miles) south of Tangier, is 48 percent owned by the national water and electricity utility ONEE.

The spokesman did not say how much the government expected to raise from the sales. L'Economiste newspaper said the state could raise 3 billion dirhams from the hotel but did not give a source.

The government did not approve the sale of several other public companies, including CIH bank, one of Morocco's best performing banks. But the government has not ruled out selling its 30 percent stake in Maroc Telecom.

The spokesman said the government would restructure state firms and open more of them up to private investors.

Morocco needs to lift revenues to finance extra spending worth 27 billion dirhams on education, health and youth employment. It also needs to cover a hefty bill for subsidies on cooking gas, sugar and wheat, which will cost the government 18 billion dirhams in 2019.

The state aims to raise 2 billion dirhams in 2019 and 2020 from a 2.5 percent solidarity tax on the net profit of firms with annual net profit above 40 million dirhams. It also aims to raise 1.2 billion dirhams in 2019 by increasing a tobacco tax.

The government says the measures will help it secure an agreement with the International Monetary Fund for a Precautionary and Liquidity Line (PPL) by the end of 2018.

Morocco has also said it would issue an international bond next year, but said its size had yet to be determined.

The draft budget forecasts the economy will grow by 3.2 percent in 2019 from 3.6 percent predicted this year. Inflation is expected to be below 2 percent.

($1 = 9.4814 Moroccan dirham)

(Reporting by Ahmed Eljechtimi Editing by Edmund Blair) ((ahmed.eljechtimi@thomsonreuters.com;))