Rabat – The government is preparing a plan to grant a monthly MAD 1,000 payment to one million Moroccan families, as a solution to eliminate or drastically reform the Compensation Fund. The proposed subsidy payment was announced today by Minister Delegate for General Affairs and Governance, Lahcen Douadi.
In response to an oral question in Parliament, Douadi noted that the challenge facing government finances today is the lack of targeting in government subsidies (transfer) payments. “We have budget envelopes, but the problem with the compensation system is that it does not benefit the people who need it the most,” he said.
“A poor person is not supposed to use 100 bottles of butane gas a day,” he said in reference to big companies that benefit from the Compensation Fund’s support of butane gas purchases.
According to the minister, granting one million Moroccan families an average monthly payment of MAD 1,000 would cost the state MAD 12 billion. He added that the MAD 20 billion that the government already spends on national welfare programs, taken together, represent a significant portion of Morocco’s national budget. These include the Compensation Fund, One Million Schoolbag and Tayssir programs, and support for widows and divorced women.
For the Head of Government, Saad Eddine El Othmani, lowering government spending and decreasing the government’s budget is inevitable. He reiterated the importance of spending reforms during an intervention in the Parliament on January 23.
“The government is working to unify the data on all its programs, before tackling the identification of classes benefiting from social programs, in order to reform the Compensation Fund,” according to Daoudi.
El Othmani acknowledged dysfunctions in the compensation system, saying that it often benefits the rich more than it does vulnerable Moroccans due to a lack of eligibility requirements.
He pointed out that the compensation fund represents a significant source of government spending and a principal cause of government debt, as nearly MAD 200 billion was spent on the fund between 2011 and 2015.