RABAT, Oct 7 (Reuters) - Morocco’s moderate Islamists are favored to win parliamentary elections on Friday, five years after they entered government and the kingdom introduced limited reforms in the wake of Arab Spring-style unrest.

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The Justice and Development Party (PJD), which has led the ruling coalition since 2011, is expected to dominate the ballot over its main rivals the Authenticity and Modernity Party (PAM), whose opponents say is too close to the palace.

After the Arab Spring, Morocco introduced limited reforms granting more powers to parliament. But the king retains most executive authority and no party openly challenges the monarchy.

Voters will select lawmakers for the 395-seat House of Representatives and the palace appoints the prime minister from the party that wins most seats.

Popular for its anti-corruption stance, Prime Minister Abdelilah Benkirane’s PJD has pushed fiscal reforms to reduce Morocco’s deficit and overhaul a system of heavy subsidies, a program he says they will continue if re-elected.

“I voted for the PJD because I want to give them a chance to finish what they started,” said Hamza Saidi, a pensioner casting his ballot in the capital Rabat. “We tried almost everything, and now they represent something new.”

Election polls are banned in Morocco, but most analysts say they expect the PJD to dominate following its performance in last year’s municipal elections, when it won major cities for the first time. PAM also did well, especially in rural areas.

The interior ministry said polling stations opened without problems. Early morning turnout in Rabat appeared steady.

BOYCOTT

PAM, whose founder is a close ally of the king and a royal adviser after leaving the party, has promised to review PJD’s reforms, especially a contested pensions overhaul. PAM presents itself as a liberal alternative to the Islamists.

More than 30 political parties are running, but only the conservative Istiqlal party, which quit the PJD government in 2013, has the national reach of the PJD and PAM.

Other groups, especially the Islamist Justice and Spirituality party, and leftist organizations, are boycotting the elections because the monarchy retains most powers.

Under the electoral system, no one party can win an outright majority, forcing winners into a drawn-out process of negotiations to form a coalition government.

Campaigning has been marked by accusations that the royal establishment, uneasy about sharing power with Islamists, has been unfairly backing PAM as a way to roll back the influence of the Islamists.

King Mohammed won international praise for improving the country’s human rights record after coming to the throne in 1999. But critics say rights groups still face harassment and the establishment has let slide promises made in 2011 of more tolerance.