Morocco Targets Further Subsidy Reductions

Morocco cut the cost of subsidies to 4.7% of GDP for 2013, from 6.6% for 2012. Subsidies are set to fall further, to 3.7% of GDP this year bringing the country’s budget deficit below 5% of GDP. This, the result of policy measures undertaken in 2012 and in 2013, has lowered Morocco’s economic vulnerabilities, the IMF says in a report on the country released earlier this month.

In absolute terms, subsidies will cost MD35bn ($4.1bn) this year from MD42bn ($4.9bn) in 2013. Both the cost of subsidies and the budget deficit are predicted to fall below 3% of GDP by 2017 (see graph).

Rabat in February ended subsidies on gasoline and fuel oil and started to cut diesel subsidies significantly as part of its drive to lower the deficit (see table). Last September the authorities started to implement a mechanism to index the prices of three subsidized energy products to world oil prices. (CONTINUED - 736 WORDS)


table Moroccan Subsidies: Costs And Recent Actions