His Majesty the King Mohammed Vi, May God Assist Him
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HIS MAJESTY THE KING MOHAMMED VI, MAY GOD ASSIST HIM Annual Report of the Public Finance Court For the year 2015 Highlights Majesty, For the year 2015, public finance indicators continued the positive trend that started in 2013, due to the improvement of the macro-economic stability of our country. This recovery is driven by several factors, chief of which is the decline in the prices of energy products and the importance of foreign investments and foreign donations. Hence, the budget deficit, again, recorded a decline to settle at 4,4% of GDP as against 4,9% in 2014; 5,1% in 2013 and 7,2% in 2012. This improvement, ascribable to the stability of regular income, in spite of the decline of foreign donations (- 71,7%), benefitted from the rise of tax revenues of 3,8% and the fall of regular expenditure by 3,5%, following the drop in compensation costs by 57,2%. Notwithstanding the improvement of these indicators, the public finance position encountered many difficulties, particularly the high level of Treasury debt whose outstanding amount reached 629,2 billion MAD, or 64,1% of GDP, as against 63,5% in 2014, knowing that the total national debt, including State-guaranteed debt, increased by more than two (2) points of GDP to stand at nearly 81% of GDP. In the same vein, in terms of Treasury payments, a tendency towards the accumulation of arrears was noted. Indeed, VAT debts due to public-owned corporations and companies, excluding the private sector, reached nearly 25.18 billion MAD at the end of 2015, as against 8,7 billion MAD in 2010, which accounts for 48% of VAT revenues reverted to State budget. These amounts constitute national debts that the State should refund, owing to the fact that they relate to major corporations of the public sector playing a key role in the economic and social development of our country. With regard to investment, the budget of 2015 was marked by the completion of important programs within the framework of sector-based strategies, such as agriculture through Green Morocco Plan and the Development Plan for Rural Mountainous Areas, industry through Industrial Acceleration Plan, tourism through Vision 2020, construction and town planning, as well as employment, through the National Strategy for Employment. However, this effort was not supported by the conditions conducive to stimulating a number of sectors and small and medium-size companies for the access to bank financing as well as the increase in investment capacities and hence job creation. Therefore, a more significant output of State investments requires adapting and updating sector-based strategies with the participation of the economic and social actors, as well as the improvement of the business climate. This would enable national companies to regain their momentum, which would have positive impacts on the increase in growth rate and job creation. 3 In relation to the economic situation, the deceleration of non-agricultural activities resulted in stagnation affecting the labor market. Indeed, the number of jobs created could not exceed 33.000 in 2015, as against 129.000 per year on average between 2003 and 2014. While the national average employment rate dipped slightly to 9,7%, with regard to the young population, aged 15 to 24, this rate worsened to stand at 27,9% at the national level and 39% in urban areas. In view of the importance of public policies in the fields of education and employment, through the amount of resources allocated to these sectors, the evaluation of the various programs and sector measures should be conducted to improve the performance of public expenditure in this respect. It would also be necessary to ensure an adequate alignment between training and job market needs in order to create conducive conditions for job creation, reduce unemployment rates and make it possible for citizens from broad strata to be integrated in a united and inclusive society. With the launch of the implementation of the provisions of the new organic law on Finance Law 2015 targeting the improvement of budgetary programming, the transparency of public finance and the consolidation of results-based management, the achievement of these objectives requires establishing a good financial governance system that would allow the streamlining of the various financial transactions. The objective is to ensure efficiency, effectiveness and economy of the interventions of public agencies. Aware of the importance of all these elements, the Public Finance Court spares no effort to contribute to the improvement and streamlining of public administration and uphold the culture of accountability, through the exercise of the entire set of powers and attributions vested in it by the Constitution and the law. The Court diversifies its interventions in line with the diversity of its responsibilities. These interventions show two major characteristics. They are of an instructive and preventive nature, through the identification of the inadequacies in the organization and management of the public agencies and the proposal for correction measures. They can, if necessary, be repressive, through the exercise, by the financial courts, of their jurisdiction which could lead to financial sanctions, with the possibility of referral to the competent legal authorities for facts likely to justify penal sanctions. Within this framework, public finance courts adopt their annual program so that all the types of competencies are exercised and all categories of agencies are audited, taking account of the requests made to the Court by some institutions, particularly the Parliament under Article 148 of the Constitution of the Kingdom. At the organizational front, and following the publication of the decree on new regional division of the Kingdom in 2015, the Court created four (4) new regional courts and did away with one. The number of regional courts now corresponds to that of the regions of the Kingdom. 4 Concerning the activities of the Court for the year 2015, twenty-eight (28) audit assignments, out of those programmed for this year, were conducted within the framework of management audit and the assessment of public projects. Moreover, the Court delivered 399 rulings on auditing and judging accounts and 25 rulings regarding budgetary and financial discipline. The Court also referred to the Minister of Justice eight (8) cases for offenses likely to justify penal sanctions. As for the work of Regional Public Finance Courts for the year 2015, worth noting is the conducting of audit assignments in partnership with the Public Finance Court for entities working at the regional level but subjected to the control of the Court. This Report comprises the summaries of six (6) audit assignments conducted within this framework. The Regional Public Finance Courts also carried out 58 management audit assignments covering all the types of local government agencies and public services, as well as some delegated management companies. They also delivered 1.891 final rulings as regards the judgment of accounts, and six (6) rulings in the field of budgetary and financial discipline. Within the framework of the assistance to supervisory authorities, Regional Public Finance Courts delivered 25 expert opinions on administrative accounts not approved by the governing bodies of the relevant local government agencies. This book presents the key observations of the audit assignments relating to management control, entered into the Annual Report of the Public Finance Court for the year 2015. 5 Major observations recorded by the Public Finance Court with regard to management audit The Annual Report of the Public Finance Court, for the year 2015, presents a summary of the reports relating to 28 assignments carried out by the various chambers of the Public Finance Court as regards management audit. Within this framework, this summary report outlines the key observations noted during the audit fieldwork. Department of Vocational Training1 The major observations, noted during the management audit assignment for the Department of Vocational training (DFP), related to the following aspects: A. Vocational training system 1. Planning of vocational training supply It was noted that the planning process, on the operational level, is not yet mastered. This is evident through the following observations: - Lack of a forecast chart of vocational training; - Delay in the development and implementation of an integrated strategy for vocational training; - Difficulties in the control of job market needs. 2. Follow-up and evaluation of the performance of the vocational training system Within this framework, it was noted that there is no integrated computing system allowing the follow-up of the vocational training system, in addition to the inadequate indicators adopted for its evaluation. 3. Assessment of vocational training supply The vocational training system is characterized by a multiplicity of actors with a prevalence of the Office of Vocational Training and Employment Promotion (OFPPT)2 1 Département de la Formation Professionnelle (DFP) 2 Office de la Formation Professionnelle et de la Promotion du Travail (OFPPT) 6 which, according to the statistics of the school year 2013-2014, represents more than 66% of the trainees registered in vocational training programs, while the contribution of the entire set of government departments hardly exceeds 10%, and that of the private sector accounts for approximately 24%. Moreover, it was noted that the measures taken to enhance the attractiveness of vocational training among young people are limited. Also, DFP could not develop the professional Bachelor program for the benefit of vocational training graduates as set out in the Emergency Plan. 4. Vocational training management at the governance and legal levels Concerning this aspect, the following was noted: - Poor development of training in the professional environment; - Inadequate measures for the promotion of on-the-job training (OJT); - Variance in the statutes governing private and public vocational training; - Inefficiency of the authorities in charge of coordination and regulation of vocational training supply.