The government expects inflation to remain under 2 percent during this period, Nizar Baraka said in an interview at his ministerial office.

As part of the stimulus package, new home buyers are getting 40,000 dirhams each in subsidies from the government which also exempts them from tax income for the equivalent of their mortgage repayments.

"All this is to back our goal to maintain our average growth at 5 percent in minimum from this year until 2012. This is our objective. We expect inflation, at 1 percent last year, to stay less than 2 percent for that period," Baraka said.

STEADY INVESTMENT

Morocco posted the highest growth rate in the Middle East and North Africa region in 2008 with 5.6 percent expansion. That rate slipped to 5.1 percent last year as the country's non-farming gross domestic product slowed due to the global crisis, Baraka said.

Textile, car, electronic, aviation and tourism industries were among those most affected by the global slowdown, he said.

First, the government came in with a stimulus package of more than 700 million dirhams that included tax breaks and other incentives to help the most vulnerable industries.

"We succeeded in cushioning these industries against the full impact of the crisis as we cut by half the effect of the crisis on textile, car, aviation and electronic activities and saved 100,000 jobs which otherwise would be lost," he said.

Meanwhile, the government increased investment spending and expanded incentives to bolster domestic consumption.

"We doubled investment spending from 80 billion dirhams in 2007 to 163 billion in 2009 and we will maintain that momentum this year and the following years until 2012," Baraka said.

The government increased salaries or lowered income taxes to energise domestic consumption.

"Domestic consumption accounts for 60 percent of the gross domestic product. We aim to keep it growing by 5 percent per year until 2012," Baraka told Reuters.

He cited tax income exemption for 500,000 low-wage workers among incentives to boost domestic consumption .

"All the country's workforce had seen their incomes rising by 10 percent minimum either through salary increase or lower income tax," he said.

MORE SUBSIDIES

As well as new home buyer subsidies, Morocco plans to establish unemployment benefits for workers who lose jobs as part an expanded social safety net. That expansion includes free healthcare for poor families who also receive subsidies of up to 100 dirhams for each child they keep going to school.

"Under the new unemployment benefit scheme, workers would receive from next year 75 percent of their salaries for six months and free training to get new jobs," said Baraka.

The government has increased spending in basic infrastructure to 400 billion dirhams for the 2008-2012 period from 80 billion in the previous period.

That investment aims to upgrade basic infrastructure including the highway network, power grids, ports and airport, the farming sector and telecoms. The aim is to boost the economy's competitiveness let it fully recovery from the crisis, Baraka said.

Morocco is linked with free trade deals with the United States and the European Union as well as several North Africa and Middle East countries including Turkey and Egypt.

It seeks to be a springboard for foreign investors who look for bigger markets for their exports.