Morocco Subsidies

Morocco removed subsidies on all oil products in January, having started in June 2012 to gradually implement subsidy reforms aimed at reducing the cost and fiscal risks related to fuel subsidies.

Commending Morocco for making progress in reining in spending – in particular on subsidies – and macroeconomic stabilization, the IMF, in its report on the country issued late last month, noted that many challenges remain, including reducing its budget and trade deficit, creation of jobs and tackling poverty.

In a review of the energy subsidy reforms, the IMF said in June 2012 the retail price of diesel, gasoline and fuel oil was raised by 14%, 20% and 27% respectively, yielding an estimated saving for the budget of 0.7% of GDP for the year. In February 2014 the authorities then ended subsidies on the domestic prices of gasoline and industrial fuel oil (excluding fuel used for electricity generation). Also the first reduction of the per-unit subsidy on diesel was introduced with a plan to gradually eliminate it by mid-2015, and this was followed by a second reduction in April 2014, a third in July 2014 and total elimination of the diesel subsidy in January 2015.


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