Morocco’s Gas Subsidies Reach ‘Historic’ Level

Rabat – Gas subsidies have reached “historic” levels in Morocco, with the country’s subsidies fund currently covering 74% of the original price for a unit of a gas bottle, amounting to MAD 116 ($12.8).

Over the first five months of 2022, Morocco’s subsidies fund is projected to spend MAD 9.2 billion ($965.9 million) on gas subsidies alone.

Given current gas prices, Morocco’s energy subsidies will likely rise to a MAD 22 billion ($2,3 billion) at the end of 2022, up by 51% from last year, Lakjaa said.

The fund continues to alleviate price pressures on staple commodities preserving the national purchasing power, Deputy Minister for State Budget, Faouzi Lakjaa, said on Monday.

Responding to MPs’ questions during a hearing in Morocco’s House of Representatives, Lakjaa explained that the global rise in commodities had put significant pressure on the fund’s resources.

In addition to the increase in the fund’s spending, the government has taken a number of measures to control wheat prices including suspending import fees on wheat since November 2021, Lakjaa said.

During the first four months of 2022, Morocco spent MAD 2.52 billion ($264.5 million) to import 20 quintals of wheat, and wheat subsidies averaged MAD 113 ($11.8) per quintal over the same period, the deputy minister explained.

Overall wheat subsidies are expected to reach MAD 7.32 billion ($768.5 million) to keep bread prices at the MAD 1.2 ($0.13) price tag, he added.

Regarding energy subsidies, Lekjaa pointed out that Morocco spent MAD 7.3 billion ($766.4 million) on gas subsidies, up from MAD 4.2 billion ($440.9 million) last year.

Between January and May 2022, gas subsidies averaged MAD 100 ($10.5) per gas unit of 12 kilograms, covering 71% of the original prices, he detailed.

Over the first four months of 2022, Morocco allocated MAD 11.8 billion ($1.2 billion) to subsidies for food and energy commodities, an 87% year-on-year increase.

Despite these measures, the country’s inflation rate has already exceeded the 5% threshold, sending commodities prices higher and weighing down on the national purchasing power.