Morocco injects $2 billion in extra spending to shield subsidies and cover flood costs

Fouzi Lekjaa said the Moroccan government will allocate an additional 20 billion dirhams ($2 billion) in spending this year to protect subsidies, absorb international economic pressures and cover flood related costs, as Rabat attempts to preserve fiscal stability amid rising external and domestic pressures.

Presenting a draft decree on additional budget appropriations before parliament’s finance committee on Monday, Lekjaa said 8 billion dirhams would be directed to the compensation fund to help maintain stable prices for butane gas and passenger and freight transport.

The move comes as Morocco continues subsidizing key energy and transport costs to contain inflation and protect purchasing power following several years of global commodity volatility.

Another 6 billion dirhams will be used to cover exceptional expenditures linked to international developments not initially included in the 2026 finance law, while 4 billion dirhams will go toward recapitalizing public institutions and state owned companies.

The government also allocated 2 billion dirhams for reconstruction and emergency spending following floods that hit parts of northern Morocco earlier this year.

Lekjaa said the additional spending would be financed partly through stronger than expected tax revenues during the first four months of 2026.

Tax revenues rose by 10.9 billion dirhams, or 8.9 percent year on year, by the end of April, driven largely by a sharp increase in corporate tax receipts, which climbed 24.9 percent, equivalent to roughly 9 billion dirhams.
Value added tax revenues also increased by 1.2 billion dirhams.

Despite the additional spending, Lekjaa said the government still expects Morocco’s budget deficit to narrow to 3 percent of GDP in 2026 from 3.5 percent a year earlier, while treasury debt is projected to continue declining toward 66 percent of GDP.