International Crisis Group: Morocco, less affected by grain crisis

Morocco is less affected by the grain crisis than most other African countries, according to a recent report issued by the International Crisis Group.

“Morocco only imports 20-30% of its wheat from Russia and Ukraine,” stated the group, but remains on the other hand, vulnerable to price shocks, as it buys 40 percent of the wheat from abroad and recently recorded an unprecedented drought.

According to the Belgium-based group, Morocco is less dependent on cereal imports than its Maghreb neighbors but is experiencing its worst drought in decades, despite recent rainfall.

Higher subsidy spending is likely to widen the budget deficit for 2022, said the report. However, the government has not yet specified how it plans to fund these additional expenditures.

“Morocco might have to turn to the IMF or plan a new bond issuance to bridge the gap,” recommended the group.

The Russian-Ukrainian war had major economic and political repercussions worldwide. Moroccans have been witnessing a serious economic crisis since the beginning of the year, due to the rise in fuel and grain prices in addition to essential products.

Russia’s invasion of Ukraine is having a “deadly” impact and threatening security in the Arab world, particularly through spiraling wheat prices, US Secretary of State Antony Blinken said last week.

The 2022 Finance Bill allocates sufficient funds to upkeep state subsidies, which would mean further pressure on state coffers, amid a high fiscal deficit that reached 7.6% in 2020.

The war in Ukraine is pushing food and fuel prices higher, which will cause inflation for longer than expected, according to a report issued by the International Monetary Fund (IMF).

The Fund further noted that the Ukraine war would “severely set back the global recovery in Morocco.”