Morocco expands plans to restructure support system for the economy
In the new budget, the Moroccan government allocates 16.36 billion dirhams to the fund, compared to some 26 billion dirhams in the current budget, and requires cash transfers to eligible households.
At a recent joint meeting of the two chambers, Prime Minister Aziz Akhannouch announced his intention to phase out aid in order to use the remaining government compensation funds to finance social assistance programmes. Last year, the authorities had to increase spending on the fund that supports the prices of sugar, flour and subsidising water and electricity and cooking gas bills, to 42 billion dirhams, up 92.8% from the previous year.
The programme targets mainly poor or vulnerable families and is expected to be implemented by the end of December 2023. It is a measure that confirms the government's commitment to reduce the leakage of public support. Akhannouch stressed that the general budget cannot directly finance social support and at the same time cover all the costs of the compensation system.
"Given that the social justice system of the current support system for the poor and vulnerable is weak, the government intends to use the margin to reduce compensation after starting direct subsidy payments in December 2023," he said.
He explained that direct social support to families will be phased out in the period 2024-2026 to complete the funding of the Generalisation Programme: "Freedom, justice for families who really deserve support".
A year ago, the Government justified keeping compensation funds at a high level despite significant cuts from 2021 because of the continued growth of food commodities, especially soft wheat and sugar, in addition to butane gas, in international markets. "To maintain the purity of the government, we will maintain a single social register that will allow us to identify categories of citizens in need of direct assistance," official spokesman Mustafa Paytas said in formulating the 2024 budget.
As a result, domestic gas cylinder prices will increase by 10 dirhams each year from April 2024 - they are currently sold to consumers for about 40 dirhams. Spokesman Mustapha Baytas explained that gas cylinder prices are increasing every year and that these increases will cease from 2026. A recent government report accompanying the Finance Bill 2024 stated that the authority is committed to maintaining prices of subsidised materials in the local market despite high volatility in international markets.
This was achieved by continuously supporting 12 kg cooking gas cylinders worth around 68 dirhams from January to August last year. The government has decided to phase out support for the remaining subsidy components of the Compensation Fund within the strategic direction of the programme for the universalisation of social protection of the population, which aims to provide social support directly to the target groups.
Economist Mohamed Jadri confirmed to Al-Arab that subsidies for cooking, flour and sugar cost low-income people billions of dirhams every year without helping them cover their living expenses. Prime Minister Aziz Akhannouch confirmed the government's intention to phase out support for the remaining compensation funds to allow time to fund direct social assistance programmes.
This backs up what Akhannouch said: "The idea that he wants to convey to the government is that the direct support provided will be well above the value of the compensatory support that is reduced compared to just for families". In the compensation report attached to the government's budget presented in the National Assembly, the important soft wheat was further supported because of the lack of domestic production due to this season's drought and import prices exceeded the standard price.