Morocco's subsidizing measures kept inflation from rising to 10%, Minister of Economy

The deployment of several support measures, according to Morocco’s Minister of Economy and Finance Nadia Fattah Alaoui, has prevented Morocco from experiencing an inflation rate close to 10% during the past year.

Data from the High Commission for Planning showed that the annual inflation rate hit 8.3% at the end of November, which is the highest level in decades. The full-year rate won’t exceed 6.5%, according to recent projections.

During a meeting with the General Confederation of Moroccan Enterprises in Casablanca on Wednesday, the minister mentioned that inflation was one of the most prominent challenges that marked last year, explaining that a number of developed countries recorded an inflation rate of 10%, and the Kingdom could have faced this issue as well.

According to Alaoui, the government’s support measures made it possible to prevent this upsurge by increasing the clearing fund subsidy to 40 billion dirhams.

Other steps that she mentioned are allocating direct financial support to the transportation sector affected by the high fuel prices, keeping the price of electricity consumption constant, and well as several actions taken by Bank Al-Maghrib.

The government official stressed that “Morocco has faced unprecedented crises in the past years,” and considered that the government has no choice but to live with the situation characterized by uncertainty around the world.

Data from the Minister of Economy show that Morocco’s exports performed well last year, increasing by an average of 33%, with exports of phosphate and its derivatives and automobiles performing particularly well. On the other hand, by the end of November, the energy bill rose by 111%.

Speaking of Morocco’s hard currency balance, Alaoui stated that it benefited from transfers made by the Moroccan diaspora, which increased by 15%, as well as the recovery of tourism revenues that reached 82 billion dirhams, exceeding the level of 2019, which served as a reference year prior to the Covid-19 pandemic.

In addition to inflation and its consequences, the government official stated that Morocco experienced the worst drought in more than three decades, causing a scarcity of water resources, but she reported that the government has drawn up a program that includes dam construction, seawater desalination projects, and urgent water treatment, with an additional budget estimated at 10 billion dirhams in the 2023 budget.

The Moroccan government is counting on achieving a growth rate of 4% during the current year, with a slight difference from the expectations of the High Commission for Planning (3.3%) and the World Bank (3.5 %) based on the following assumptions: a grain crop of about 75 million quintals, the price of butane gas at about USD 800 per ton, and a budget deficit of 4.5%.

Lastly, the minister discussed the work of the Mohammed VI Fund for Investment, revealing upcoming meetings with government sectors to identify priority areas for investment. 

The budget of the fund is estimated at 15 billion dirhams allocated by the government, with a goal of bringing in the financing of 30 billion dirhams from national and foreign institutional investors.