Government subsidies to basic commodities: Expenditure halved
At the end of October, offset issues amounted to 11.2 billion dirhams (US 1.12 billion). This represents a drop of 52.4% compared with the same period in 2023, according to the latest statistics from the Kingdom’s General Treasury.
These issues represent a realization rate of 66.2% of the forecasts contained in the 2024 Finance Bill. The latter had forecast 16.36 billion dirhams (US 1.63 billion) for the compensation budget. By the end of 2023, expenditure issues had exceeded 39.19 billion dirhams (US 3.91 billion), versus a budget forecast of 26 billion. They were achieved in a context marked by “ the persistent rise in the prices of subsidized products on the international market on the one hand, and by the drought conditions of the 2023/2024 agricultural season at the national level, having considerably impacted the level of local production of sugar and soft wheat, on the other ”, according to the latest annual report on Government Subsidies to Basic Commodities, appended to the 2025 Finance Bill. Under these conditions, “ in order to contain inflation and ensure a regular supply of basic products, and to enable domestic prices to be stabilized with a view to supporting purchasing power, the Government has taken a series of measures ”, it states. According to the document, “ the Government will continue to support the prices of butane gas, sugar and domestic soft wheat flour, through the programming of a budget of 16.536 billion MAD (US 1.65 billion) under the 2025 Finance Bill ”. For butane gas, the average annual subsidy for a 12-kilogram butane gas cylinder will be significantly reduced by 25 dirhams (US 2.5) on an annual basis by 2023. The Government subsidy followed a downward trend over the first 7 months of 2024, reaching its lowest point last June. With regard to sugar price support, the Government grants two types of subsidy, notably the flat-rate consumption subsidy, currently around 3.6 dirhams (US 0.36) / kilo for average national consumption of 1.21 million tons, representing an average annual charge of 4.36 billion dirhams (US 436 million). Added to this is the additional import subsidy for raw sugar, which varies according to world price trends, and represents the difference between the import cost price and the target price set by the authorities, prior to the revision of the flat-rate subsidy by almost 27% from April 2023, to reach almost 3.60 dirhams (US 0.36) / kilo, compared with 2.84 dirhams (US 0.28) / kilo.
For local soft wheat and national soft wheat flour, Government subsidies reached over 1.34 billion dirhams (US 134 million) (excluding the import refund system) by the end of 2023, up 5.77% on the previous year. Over the past 5 years, the amount of Government subsidies to basic commodity subsidies for these products has varied between MAD 1.29 billion (US 129 million) and MAD 1.53 billion (US 53 million).
Mohamed Ali Mrabi
