Rabat – While energy prices remain elevated on the backdrop of the Ukraine war, the drop in Morocco’s food imports is positively affecting the trade deficit. At the end of January 2023, the country’s trade deficit rose by 10%, against a staggering 75% a year earlier.
A trade deficit of trade balance reflects a country’s ability to cover the monetary value of the imported goods it needs with the goods it exports. Ideally, countries strive to maintain the values equal or balanced. Otherwise, the government has to resort to much-needed reserves of foreign currency to cover the deficit.
As Morocco emerges from the severe 2022 drought that had crippled the country’s agriculture, food imports in 2023 slowed down, rising at an annual rate of around 4% or MAD 287 million ($27 million), compared to 56% or MAD 1.7 billion ($163 million) a year earlier, according to a report from Morocco’s Exchange Office (OE), the country’s foreign trade watchdog.
Despite the recovery in food imports, the country’s energy bill is still a major factor weighing down on its trade deficit. Morocco currently imports over 90% of its energy needs, making it vulnerable to fluctuating energy prices.
At the end of January 2023, the country’s energy bill rose by 30% or over MAD 2 billion despite the decline in the volume of energy imports, which dropped by 13%.
The hike in energy expenditure is primarily caused by the continuously rising prices on the international market, OE data show, noting that gas and fuel prices rose by around 35%.
With the persistent rise in energy products, the Moroccan government faces the prospect of higher subsidies for basic commodities. Currently, the government subsidizes more than 50% of the price of a standard bottle of cooking gas.
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