Oil crisis in Morocco: What solutions? Economists respond

Morocco is bearing the full brunt of rising hydrocarbon prices (oil and gas), due to the international situation of the conflict between Ukraine and Russia. Faced with the difficulties, the Akhannouch government has before it several possibilities to deal with the situation. Here are the solutions proposed by economists.

The government has opted for direct aid to transport operators, the first to be affected by the rise in oil prices. But other solutions are available to him.

Contacted by MoroccoLatestNews FR, economists Yasser Tamsamani, Doctor of Economics from the University Paris 1 panthéon Sorbonne and Omar Kettani, Economist and professor at the University Mohammed V, propose the alternatives that the executive could use to mitigate the increase in prices of energy products, oil in particular on the national economy, on households and businesses.

The solutions proposed by Yasser Tamsamani

A distinction must be made between short-term actions and long-term ones. It is urgent that, in order to prevent the current rise in the prices of petroleum products and raw materials from turning into inflation, i.e. a generalized rise in prices on all markets and self-sustaining over time, the government should come to the aid of households and businesses whose demand is little or not elastic to the variation in the prices of these products.

These are mainly peri-urban households whose mobility is dependent on their own means of transport and companies, including transport companies, whose petroleum products represent an essential input that is difficult to substitute in the short term. We can also clearly see the advantage of having a fine and precise statistical apparatus.

Otherwise, if the government bows its head hoping that the wave will pass by putting forward the argument that its financial resources are limited, it would be taking the risk of seeing inflationary dynamics set in even more detrimental to growth and its budget.

It also seems urgent to revisit the operating rules of the petroleum products market in Morocco. In fact, the lessons of producer microeconomics plead for the regulation of margin behavior in a fundamentally oligopolistic market such as the import and distribution of petroleum products. Regulation does not consist in imposing on the actors of this market pricing (low, at marginal productivity) as if the latter is competitive at the risk of pushing them out of the market, but pricing (at average productivity) that allows them to stay there without harming the end consumer.

The very big advantage of regulation is that it will introduce a good dose of transparency into the real operating conditions of this market. I am thinking in particular of the volume and conditions of over-the-counter contracts, of the position of future players on the futures market and in relation to the various hedges contracted to protect themselves against price variations…

Ultimately, the development of a national refining industry is common sense in order to cushion future oil shocks and fits well into the logic of any proactive and integrated industrial policy.

The improvement of the country’s energy efficiency, the expansion of the public transport network, the insulation of buildings, the development of the awareness of citizens and businesses of the challenges relating to the preservation of the environment and to pollution, the rebalancing of the energy mix, are all other levers to make the national economy less sensitive to oil shocks.

The solutions proposed by Omar Kettani

How to stem a rise that does not depend on the internal market? These are things that can be settled in advance when you are a country that programs risks in advance and plans reactions to risks.

Israel, since it is in a sensitive area, seeks all the risks it can run. If there is a food shortage, they stock up, if there is a risk of rising prices, they try to replace these products so as not to systematically depend on the international market.

China at present, has taken all measures for the eventuality of a nuclear war. It has more than half of the world’s food reserves stored at home.

So we have to plan, now that it’s done (the crisis, editor’s note) we can’t do anything about it, we have to suffer. But we must learn from this crisis. The only solution is that we have to make holes in our belt to tighten a little more, and that, at all levels, from the State first.

All superfluous state spending must be reduced or eliminated. There are huge savings to be made in government departments, foreign travel, domestic travel, non-salary benefits, anything superfluous should be cut.

It would take a policy of austerity and a fight against the rent of civil servants, the private sector, the foreign sector.

On the other means of reducing the impact, the State receives a tax on oil, and the more the prices increase the more its tax increases, but at the same time, currently it has many constraints. He has to pay more for oil, grain imports, etc. So I don’t think we can ask the state to reduce these taxes.

On the other hand, it would be necessary to subsidize all public transport such as taxis, and in particular for the transport of food products. For private users, they will have to reduce their non-essential trips, use their vehicle less for short-distance trips to pay less. Otherwise, the rise in oil prices will also affect food prices and all other consumer products and this will create an economic slump.



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