Morocco’s compensation fund policy sparks heated debate amid successive economic shocks

Morocco’s compensation fund policy sparks heated debate amid successive economic shocks

Morocco is heading towards eradicating the compensation fund, a government support system established in the 1930s to regulate basic commodity prices and safeguard social security. 

This move has drawn public attention and raised concerns about its potential repercussions. Experts have weighed in on the situation, offering insights into the consequences and the need for alternative measures to ensure citizens’ well-being.

Experts delved into the context and public reactions, describing the compensation fund as a lopsided policy, in an interview with MoroccoLatestNews.

He emphasizes the importance of not canceling the fund without providing a suitable replacement, as it would infringe upon citizens’ right to a decent standard of living. 

Originally, the fund was created to stabilize basic goods’ prices, protect consumer purchasing power, and stimulate economic development across various sectors.

Kettani believes that eliminating the compensation fund is unthinkable unless the government implements direct initiatives aimed at ensuring a decent living for those in need, including a reconsideration of the minimum wage. 

He criticizes past government decisions, such as those during Abdelilah Benkirane’s government (2011-2017), which he believes severely affected disadvantaged groups.

Furthermore, Kettani thinks that “supporting the purchasing power of the majority, low- and middle-income families, is unattainable due to Morocco’s weak economy.” 

He argues that a genuine transformation involving economic growth, job creation, and equitable wealth distribution is required to meet essential needs. 

However, this potential is stifled by misguided investment choices, excessive military spending, and regional boundaries that hinder development.

“Bribery and protecting market dominators remain significant issues that need addressing,” he added.

Removing the compensation fund, Kettani warns, would only further burden low- and middle-income individuals, “it is a hit that they don’t need!”

Head of government Aziz Akhannouch recently addressed the rumors looming around the compensation fund, emphasizing his government’s commitment to creating a successful direct social support system. 

A direct social support program will be gradually introduced by the end of the current year, relying on a targeting system for a unified social registry. However, questions have persisted regarding the state budget’s capacity to finance direct social support while sustaining the clearing system, with Akhannouch confirming that the country cannot afford it.

Economist Amine Sami recalled the recent economic context in which just a decision falls, talking about how the draft finance law for the year 2024 includes raising the price of a bottle of gas, which will heavily affect social classes and the cost of living. 

“Lifting subsidies on some items could lead to negative repercussions, as pressure on vulnerable economic classes may increase with the high prices of these items, affecting the standard of living and exacerbating social challenges,” explained the expert.

In addition, raising subsidies may increase economic disparity between different classes, affecting social justice and balance.

Determining economic strategies that satisfy the requirements of the population can also be aided by an honest and open discourse with society, concluded Sami.


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