Morocco is increasing its public infrastructure investment to around 12 percent of 2024 GDP between 2024 and 2030. Empirical evidence indicates that improvements in infrastructure quantity and quality have significantly contributed to Morocco's productivity growth in recent decades, with both factors accounting for roughly one-fifth of productivity gains since 2005.
Past infrastructure outcomes show notable progress in electricity generation, telecommunications, and port capacity, though challenges remain in road quality and energy security. The efficiency of investment translation into results is also highlighted as a key dimension, with the public spending efficiency gap reflecting the difference between actual and potential outcomes.
Model simulations using the IMF's FSGM suggest that the planned investment increase would boost productivity and long-run real GDP, with gains driven by productivity spillovers from accumulated public capital. Under the baseline scenario, real GDP is projected to be 3 percent higher in the long run, supported by higher total factor productivity. However, near-term private investment is initially subdued due to crowding out, recovering over the medium term as productivity gains materialize.
The current account deficit widens in the short term due to high import leakage in the infrastructure program, narrowing after the construction phase ends. Alternative scenarios highlight the critical role of public infrastructure spending efficiency: a 20 percent efficiency gain (Scenario B) raises long-run GDP by 3.5–4 percent, while a 20 percent shortfall (Scenario C) limits gains to 2.0–2.5 percent. Cost overruns (Scenario D) erode fiscal space without significant growth benefits, while tax financing (Scenario E) reduces debt but temporarily compresses short-term demand.
Key takeaways emphasize the importance of structural factors, such as mitigating import leakages and crowding out, enhancing public sector investment efficiency, preventing cost overruns, ensuring infrastructure maintenance, and monitoring public debt. The study concludes that Morocco's infrastructure scale-up offers long-term growth potential, contingent on efficient implementation and fiscal discipline.
