The World Bank alarmed to significant discrepancies in the prices of agricultural commodities in Morocco, considering most hikes unjustified.
This came in a recent report from the international financial entity entitled “Responding to Supply Shocks,” which calls on governments to introduce structural policies to ease restrictions on supply chains and the supply of commodities, to address issues in food markets.
The publication of the report comes at a time when prices of red meat, vegetables and fruits in Morocco have increased dramatically, less than two months away from Ramadan.
High prices for consumer goods are increasing social outrage at living costs crisis, exacerbated by the multiplicity of intermediaries and speculators between the farmer and the final consumer.
The World Bank expects the Moroccan economy to grow by 3.1% in 2023, but faces the risks of negative developments due to geopolitical tensions, including the conflict in Ukraine, the slowdown in the activities of Morocco’s main trading partners in the euro area, and new potential climate shocks such as drought.
According to the report, real GDP growth rates declined from 7.9% in 2021 to an estimated 1.2% in 2022, while the current account deficit increased from 2.3% to 4.1% of GDP.
World Bank data indicated that the conflict in Ukraine, with the destabilization of global supply chains, resulted in an increase in prices in most parts of the world, and the inflation rate in Morocco reached its peak at 8.3% at the end of 2022.
According to Morocco’s High Commissioner for Planning (HCP), the inflation rate for the year 2022 was about 6.6 percent, the highest figure recorded in Morocco in three decades.
To mitigate the effects of the increase in food and energy prices on households, the World Bank stated that Morocco adopted a package of policies that included providing general support for basic foodstuffs, and not increasing the prices of the regulated commodity.
According to the report, Morocco’s approach has led to stabilizing the prices of goods and services, which account for about 25% of average household spending, thus avoiding a further increase in poverty rates, after this required the mobilization of additional public spending amounting to about 2% of GDP.
Despite these measures, the report confirmed that the most modest and most needy households still suffer most from the effects of high food and other prices due to inflation.
According to the report’s calculations, the annual inflation rate was almost a third higher for the poorest 10 percent of the population than for the richest 10%, primarily because the effects of increased food prices capture a higher proportion of the spending of the poorest households.
The World Bank praised the “big planned reform of social safety nets in the Kingdom,” stating that it “will allow effective targeting of support to reach those who deserve it and support the poor and most needy groups,” referring to the generalization of social protection, including the unified social register that will be approved in the future to grant direct support to eligible families.
Jesko Henchel, Regional Director of the Maghreb and Malta Department of the World Bank, said in a statement quoted by the report that the measures taken recently to address supply shocks and preserve the purchasing power of Moroccan families have significantly mitigated this impact and prevented more people from falling into poverty.
Hentschel added that the launch and generalization of the family subsidy system, to be implemented in Morocco, will help in effective targeting of the neediest population groups in a fair and cost-effective way to address the large price increase of this magnitude.
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