The Moroccan government plans to spend 15.5bn dirhams ($1.61 billion) on subsidies, down from 23bn dirhams budgeted for this year, the 2016 draft national budget showed. The kingdom expects subsidies of only 14 bn dirham in 2015 – down from budgeted 23 bn due to lower energy prices.
Morocco started to repair its public finances three years ago after huge deficits in 2012 when the government spent billions to calm Arab Spring-like protests. The country has done more than most North African countries to make painful changes required by international lenders to curb deficits, such as ending fuel subsidies and freezing public sector hiring. The government still controls the prices of wheat, sugar and cooking gas.
In another move to step up with the subsidy reform, the government is planning to fully liberalize gasoline and diesel prices which started from December 1. The government has said gross domestic product (GDP) would grow by 3% in 2016, down from an estimated 5% in 2015.
The forecast is more ambitious than that of Morocco’s planning agency, which had said the economy would grow by 2.6% in 2016 as agricultural output fell from an exceptional 2015. Agriculture accounts for more than 15% of the economy, with this year’s cereal harvest hitting a record 11 million tons.
The budget deficit is expected to come in at 3.5% of GDP in 2016, down from 4.3% in 2015, while inflation is seen at 1.7%, according to government estimates.
($1 = 9.90 Moroccan dirham)