The subsidies headache | L’Economiste

Here is a budget item to watch closely: subsidies. With soaring prices, especially for gas and wheat, it will be increasingly called upon. At the end of January, subsidy expenditures reached 5.4 billion MAD, which corresponds to a realization rate of 31.7%.

At least according to the data of the General Treasury of the Kingdom (TGR), which is based on the issuance of orders or mandates endorsed by the designated accountants, in accordance with the provisions of Article 32 of the organic law relating tothe Appropriations Bill. At this rate, and if the increases continue, the budget for commodity subsidies could easily be exceeded. In this case, the government could activate article 19 of the 2022 Appropriations Bill.

This article states that: «in accordance with the provisions of Article 60 of Organic law No. 130-13 relating to the Appropriations Bill, the government is authorized, in the event of an urgent and unforeseen need in the national interest, to open up additional appropriations during the year by decree. The parliamentary committees res-ponsible for finance shall be informed in advance. The decrees referred to above must be submitted to Parliament for ratification in the next Appropriations Bill».

This surge in prices, particularly for butane gas, may delay the reform of subsidies. This product weighs heavily in the burden of subsidies especially as national consumption is on a significant growth.
In 2020, it will reach 222 million of 12-kilo cylinders versus 143 million in 2010. This positions Morocco as the seventh largest residential market in the world. A ranking that is explained by «the great availability and accessibility of butane gas».

Elsewhere, the cost remains the main obstacle to increased use of LPG as well as the development of the supply chain. In any case, Moroccans enjoy one of the lowest prices in the world. The 12-kilo cylinder is sold at 40 Dirhams while its cost price is130 Dirhams!

The reform of the gas subsidy should, in principle, be carried out gradually. The timetable announced at the time by the former El Othmani government provided for a liberalization over two years, in 2023 and 2024. The resources freed up are supposed to be used for the generalization of social protection: family allowances, extension of retirement, etc. And the establishment of the Single Social Register should ensure better targeting of social categories eligible for aid. For soft wheat flour and sugar, it should start this year and continue in 2023. But here again, the international situation does not facilitate the government’stask.

Khadija MASMOUDI