Morocco’s Minister in charge of Budget, Fouzi Lekjaa, announced that the government will resume subsidy reductions when international market conditions allow.
The Moroccan government reduced fuel subsidies in 2015, a move praised by the International Monetary Fund. However, it continues to control prices of soft wheat, cooking gas, and sugar.
Morocco initiated a national registry to identify households in need of direct support, as a precursor to phasing out subsidies. Lekjaa stated, “Morocco will resume subsidy reform based on international market conditions.”
He added that subsidy reform is always a priority but geopolitical context hampers price predictions. Morocco’s spending on subsidies until July was 17 billion dirhams ($1.7 billion), down 32% from the previous year, when annual subsidy costs soared to 42 billion dirhams ($4 billion) due to rising soft wheat and butane gas prices.
Lekjaa mentioned that the government expects the fiscal deficit to drop to 4% in 2024 from the 4.5% projected for the current year. He emphasized that maintaining economic macro balances is a strategic goal for public finance, especially after a recent earthquake in the Atlas Mountains that claimed nearly 3,000 lives and affected 2.8 million people.
Lekjaa added that reconstruction efforts will positively impact growth. The earthquake mainly affected subsistence farming, which will be compensated by other sectors like tourism.
In its 2024 budget proposal, the government anticipates 3.7% economic growth, while expecting 3.4% growth in the current year.
Morocco unveiled a five-year, $12 billion reconstruction plan, including infrastructure development.
The minister mentioned that Morocco won’t resort to borrowing but will tap into various ministries’ budgets, a dedicated relief fund, and international cooperation for post-earthquake reconstruction funding.
The IMF offered Morocco a flexible credit line of $5 billion this year and a $1.3 billion climate adaptation loan. Lekjaa stated that Morocco is on the right track to regain its investment-grade rating after exiting the “gray list” of countries subject to increased monitoring last year.
