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FILE PHOTO: Morocco's Prime Minister Abdelilah Benkirane addresses the 69th United Nations General Assembly at the U.N. headquarters in New York September 25, 2014. REUTERS/Lucas Jackson/File Photo

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By Samia Errazzouki

RABAT (Reuters) - Moroccan King Mohammed VI is replacing Prime Minister Abdelilah Benkirane and will ask another member of the Islamist Justice and Development Party (PJD) to form a government after five months of post-election deadlock, a statement from the royal cabinet said on Wednesday.

The king took the decision "in the absence of signs that suggest an imminent formation" of a government and due to "his concern about overcoming the current blockage" in political negotiations, the royal statement said. It did not say who he would name to replace Benkirane.

Benkirane had been reappointed after the PJD, which first came to power in 2011, increased its share of the vote in October elections, maintaining its position as the biggest party.

Under Morocco's election law no party can win an outright majority in the 395-seat parliament, making coalition governments a necessity in a system where the king still holds ultimate power.

But the PJD's relations with a former coalition partner, the conservative Istiqlal party, soured over economic reforms, and talks over formation of a government with the centre-right National Rally of Independence (RNI) stalled.

Benkirane's efforts have met with resistance from parties that critics say are too close to the palace. Royalist supporters have been reluctant to share power with Islamists since the king ceded some powers in 2011 to ease protests.

The palace says the king maintains the equal distance from all parties and dismisses claims of royal interference.

Concern has mounted about the impact of the political impasse on Morocco's economy. This year's budget, which should have been approved by parliament by the end of 2016, cannot be passed until a government is in place.

Speculation had been building that King Mohammed would attempt to break the political deadlock following his return on Tuesday from a tour of African states.

The palace statement said the king would receive the new prime minister soon, and would task him with forming a government.

The king thanked Benkirane for his service as prime minister, praising him for his "effectiveness, competence and self-sacrifice".

A source in the PJD told Reuters the party will be meeting Thursday morning to discuss the king's decision, which Benkirane said he accepted.

"This is our king and he came to a decision under the framework of the constitution, which I've always expressed support for," he told Reuters.

"I'm going to perform ablution, pray, and continue working on the ground."

(Writing by Aidan Lewis; Editing by James Dalgleish and Lisa Shumaker)

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