World Bank Urges Morocco to Adopt Climate-Friendly Economic Reforms

The World Bank has recommended "the elimination of ’brown’ tax expenditures, the removal of explicit subsidies on butane gas, the introduction of a ’carbon tax’ and the increase in water tariffs in Morocco, to impose a change in consumer behavior and generate climate benefits. The implementation of these reforms should increase the country’s GDP by 2%. However, the bank’s long-term analysis predicts that "the macroeconomic impacts of the measures would be better than those of an equivalent tax reform," the report states.

The measures "should be carefully designed to ensure a fair transition" when prices are more stable, the World Bank advises, warning about the outcry that the surge in butane and water prices could create. It also recommended compensating poor and vulnerable people to offset the impact of the surge in bills. "A well-targeted cash transfer program could be the best option to offset the negative impacts on the poorest households," the report states.