Morocco Delays Subsidy Reform Amid Global Price Uncertainties

The reform of subsidies remains "a priority" for the government, but "the geopolitical context does not provide visibility on prices," said Fouzi Lekjaa to Reuters, on the sidelines of the annual meetings of the World Bank and the IMF in Marrakech, assuring that the reform will resume once "the prospects are favorable".

Compensation expenses have recorded a decrease this year, but remain quite high. At the end of July 2023, they are estimated at 17.8 billion dirhams, down 32.2% compared to the same period in 2022, i.e. a saving of nearly 8.5 billion dirhams. These charges are distributed as follows: 10.4 billion dirhams for butane gas, 3.3 billion for sugar, 3 billion for national flour and 920 million dirhams of subsidies granted to transport professionals.

In order to "safeguard macroeconomic balances", the government also plans to reduce the budget deficit to 4% in 2024 against 4.5% this year, Lekjaa announced, indicating that economic growth should reach 3.7% in 2024 after a forecast of 3.4% for this year.

To implement its reconstruction plan over the next five years and which requires an investment of 120 billion dirhams, Morocco will not resort to debt, but "rather to the budgets of the various ministerial departments, the special earthquake fund and international cooperation," Lekjaa explained. Regarding its rating, Morocco could obtain an Investment Grade after its exit from the FATF "gray list", he said.