Subsidizing butane gas: A taboo finally broken
Gone are the 40 Dirham- (USD 4) and 10 Dirham- (USD 1) bottles of butane gas. Since Monday May 20, 2024, the Government has increased the price of 12 kg bottles by 10 Dirhams, bringing the selling price to 50 Dirhams, and that of 3.5 kg bottles by 2.5 Dirhams, raising them from 10 MAD to 12.5 MAD. The announce-ment was made via a press release from the Ministry of Finance on Sunday May 19, taking everyone by surprise.
After fuel, the Government is now tackling the reform of the butane gas subsidy. The reform will be phased in over three years: 2024, 2025 and 2026. The level of increases for the next two years has not yet been specified. The next steps will be assessed in the light of overall economic conditions.
Eventually, will true prices be applied, or will prices be capped? The Ministry of Finance was due to answer this question during the question time session in Par-liament on Monday May 20 … During discussions relating to the Finance Act, Fouzi Lakjaa, Minister of the Budget, had mentioned a “price cap”, without providing further details concerning the desired level. In preparation for this removal of butane gas subsidy, the Government took stock of all existing social programs and grouped them together to ensure the necessary efficiency in targeting vulnerable groups.
Between 2015 and 2023, 174 billion dirhams (USD 17 billion) were allocated to support butane gas, sugar, and flour, representing an annual average of 19.4 bil-lion dirhams (USD 1.9 billion). However, the most vulnerable groups, represent-ing 20% of the poorest population, received over the same period only 14% of these subsidies, namely 24.36 billion MAD (USD 2.43 billion), with an annual average of 2.7 billion MAD (USD 270 million). By contrast, the wealthy social class, representing 20% of the richest population, absorbed 27% of the support, i.e. 47 billion MAD (USD 4.7 billion) over the same period, with an annual aver-age of 5.22 billion MAD (USD 522 million), double the support for the poorest 20%.
These statistics, presented to the Finance Committee during discussions on the 2024 Finance Act, also reveal that 60% of the population in vulnerable situations received only 40% of the butane gas subsidy, namely 70 billion dirhams (USD 7 billion) over the 2015-2023 period, with an annual average of 8 billion dirhams (USD 800 million). In contrast, the wealthiest 40% received 60% of the price sub-sidy expenditures, namely 104 billion dirhams (USD 10 billion) over the same pe-riod, with an annual average of 12 billion dirhams (USD 1.2 billion).
Khadija MASMOUDI
