RABAT - Privatisation and improving governance of public companies will help Morocco generate 8 billion dirhams ($842.85 million) and curb the budget deficit to 3.3 percent of GDP in 2019, a minister said on Monday.

Without privatisation revenue, the budget deficit would stay almost flat at 3.7 percent from a forecasted 3.8 this year, Economy and Finance Minister Mohamed Benchaaboun said in a presentation on the 2019 draft budget in parliament.

The minister did not specify which companies the state might target for privatisation.

The draft budget, which was submitted on Friday, also 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, he said, as funding for social services and the reduction of regional disparities increases.

Other measures to boost revenue include rising the domestic consumption tax on tobacco whose revenue will amount to 1.2 billion dirhams in 2019, he said.

A surge in spending on social services, including education, health and youth employment would result in a financial gap of 27 billion dirhams.

The 2019 draft budget comes against a backdrop of trade wars and geopolitical tensions, and as oil and gas prices rose by nearly 40 percent compared with last year, he said.

Morocco, which is the largest energy importer in North Africa, lifted subsidies on fuel under pressure from international lenders but maintains them on cooking gas, sugar and wheat.

Based on a price of 560 dollars per tonne of gas, the draft budget earmarks 18 billion dirhams to subsidies, up 5 billion dirhams from this year, he said.

The portion of the budget dedicated to education increased 5.4 billion dirhams to 68 billion dirhams, while the health budget expanded by 1.6 billion dirhams to 16.3 billion dirhams.

As part of measures to create jobs and encourage youth entrepreneurship, the minister said that all young entrepreneurs will have their state loans wiped out.

Public investment would reach 195 billion dirhams in 2019 with priority placed on industry, agriculture and improving the business climate.

Based on an average cereal harvest of 7 million tonnes, the 2019 draft budget forecast economic growth of 3.2 percent, down from 3.6 percent this year.

Inflation is expected to stay below 2 percent, the minister said. ($1 = 9.4916 Moroccan dirhams)

(Reporting by Ahmed Eljechtimi in Rabat Editing by Ulf Laessing and Matthew Lewis) ((ahmed.eljechtimi@thomsonreuters.com))