Morocco Allocates $2.3 Billion to Subsidize Basic Food, Energy Products in 2023

Rabat – Morocco’s government is set to allocate MAD 26 billion ($2.3 billion) in 2023 to subsidize basic food and energy commodities and preserve national purchasing power.

According to the country’s Economy and Finance Minister, Nadia Fettah Alaoui, the government is set to spend MAD 3.1 billion ($281.5 million) on subsidizing wheat.

While presenting the highlights of the 2023 state budget, the minister announced that the cost of subsidizing basic food and energy commodities would skyrocket by 72% in 2023. The estimate for next year does not factor in the direct aid transportation professionals receive.

Noting the historic rise in state subsidies for gas for domestic purposes, the minister explained that in the course of the first nine months of 2022, gas subsidies rose by 70%. The subsidies fund currently cover MAD 97 ($9) out of the total cost of a 12-kilogram gas bottle.

During the presentation, Fettah Alaoui announced that the government will move forward with the tax cuts for the middle class, explaining that the decision to reduce income taxes would cost the country MAD 4.2 billion ($381.4 million) in tax revenue.

The news of the tax cut first surfaced in July, when Morocco’s Deputy Minister for State Budget, Faouzi Lakjaa announced the measure saying that it aims to mitigate the effect of rising price inflation on the national purchasing power.

However, given the current structure of Morocco’s labor market, the tax cut is unlikely to make any significant improvement.

Morocco’s working class is already exempted from paying revenue taxes under the current tax code and almost 60% of Morocco’s working population falls below the annual minimum taxable threshold of $3,000, according to official data.

Another 86% of Morocco’s population currently receiving pensions is also tax exempt as their pensions fall below the minimum dictated by the tax code.

It follows that only 2.7% of Morocco’s retired population would benefit from the proposed tax cut.