HomeEconomyState support amounted to $7.6 billion in 2022

State support amounted to $7.6 billion in 2022

In 2022, energy support to Morocco reached $7.6 billion, or 5.8% of gross domestic product (GDP), while in 2021 the cost of support was only $6.7 billion, representing 5.4% of GDP. In 2022, Moroccan GDP was $142.87 billion.

This is revealed in a report by the Arab Institute of Business Leaders (IACE), entitled ” The cancellation of energy subsidies in non-oil Arab countries“. The report looks at ‘energy dependence’, and the extent to which a country’s economy depends on imports to meet its energy needs. Due to the limited resources in this area, non-oil Arab economies, such as Morocco, Tunisia, Egypt, Jordan and even Lebanon, are highly dependent on energy.

With regard to Morocco, the IACE report recalls that the Kingdom has long subsidized energy, particularly fossil fuels, such as gasoline, diesel and butane gas, noting that the government has used these subsidies as a means of achieving the country’s growth and welfare objectives.

Thus, and since the 1970s, Morocco has provided energy support in response to the global oil crisis, but also to mitigate the negative impact of high fuel prices on the national economy and the purchasing power of citizens. Energy subsidies have therefore become a constant component of Moroccan economic policy.

However, the IACE report points out that these subsidies put the country under severe budgetary pressure until 2014, when the government began to implement a comprehensive reform program aimed at reducing fossil fuel subsidies, while liberalizing fuel prices.

According to the Institute, total energy consumption in 2019 amounted to 22.2 million tons of oil equivalent, an increase of 4.4% compared to 2018. Oil accounted for 47% of the total energy consumption in Morocco in 2019, followed by coal (29%), gas (13%) and renewable energy (11%).

The support granted to fuels and butane gas was to be phased out, with the aim of definitively canceling them in 2020, the report also underlines, which also notes that in 2022, the support granted to fuels is still in course and even reached 1.4% of GDP, or $1.8 billion.

The maintenance of the subsidy is due, among other things, to the rise in fuel prices after the outbreak of the war in Ukraine, which prompted the government to launch an exceptional subsidy in March 2022 for the benefit of transport professionals, and which benefited approximately 180,000 vehicles, with the aim of supporting the purchasing power of citizens and limiting soaring prices.

In short, the IACE report emphasizes that the aforementioned Arab countries, including Morocco, are highly dependent on energy imports to meet their needs, particularly in terms of electricity production, transport and industry. This is a burden on their economies, the report says, since they have to bear the costs of these imports in foreign currencies, which increases the pressure on the balance of payments.

To deal with this problem, the paper argues that many non-oil Arab economies offer support to their citizens, particularly fuel and electricity subsidies. A subsidy that aims to provide an affordable energy bill to consumers, reduce the burden on low-income families and promote economic and social development.



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