The Impact of Fiscal Equalisation on Regional Inequalities: The Case of Morocco

This study examines the relationship between fiscal equalisation and regional inequality in Morocco over the period 2017–2022, using a simultaneous equation model and data covering the country’s twelve regions. During this time, Morocco implemented various intergovernmental fiscal transfer mechanisms intended to address spatial disparities and promote balanced regional development. The analysis, estimated using OLS, 2SLS, and GMM methods, reveal that existing equalisation policies have not substantially reduced territorial inequalities. On the contrary, fiscal transfers appear to disproportionately benefit more economically and administratively efficient regions – such as Casablanca-Settat, whilst disadvantaged and peripheral areas continue to lag. These findings suggest structural limitations in the current allocation criteria, which may inadvertently reinforce regional imbalances. To improve equity and cohesion, future reforms should aim to redesign equalisation frameworks, taking into account the structural needs and development capacities of larginalized regions.