Budgetary restrictions are very likely in Morocco

Budgetary restrictions are very likely in Morocco

By Nabil Ouzzane on 06/15/2022 at 8:45 p.m.

Kiosk360. Faced with soaring prices, especially fuel, budget cuts will certainly be made to meet the country’s most urgent needs, says Mostafa Labrak, energy and fuel expert. This article is a press review taken from the daily Les Inspirations Eco.

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Moroccans woke up today Wednesday, June 15 to a new increase in fuel prices at the pump. The price of a liter of gasoline, in Casablanca, reached up to 17.78 dirhams, against 15.63 for that of diesel. In question, a continuous increase in international energy prices. The impact on the purchasing power of citizens, but also on the state budget, is likely to be heavy.

Quoted by the daily Eco Inspirations, Mostafa Labrak, Managing Director expert in energy and fuels, confirms this fact. And this knowing that Morocco imports all its energy from outside, the country not being a producer. The risk is that of an aggravation of inflation, with serious repercussions on purchasing power, on social stability, on economic behavior, purchasing and investment. For Labrak, one of the few remedies available to the state is to reduce its spending on certain aspects to offset the announced increases.

“Restrictions and budget cuts will certainly be made in order to deal with the most urgent. And, although the government proclaims loud and clear that it will not revise the Finance Act (LF) and will continue to implement its application, disruptions to investment budgets, for example, or returns to subsidies can be initiated and therefore encumber the proper functioning of the Finance Act. Social peace is very important to governments,” says the expert. At the beginning of June, the government decided to resort to an opening of additional credits of 16 billion dirhams to cover the compensation costs.

Pressures on foreign exchange reserves are also a problem. Moroccan imports are made exclusively in dollars, and the latter continues to rise compared to the euro and the dirham. The expert also notes that, since the outbreak of the rise in international fuel prices, banks have had trouble finding enough foreign currency in their trading rooms “since, for the same volume, we have to spend more than dollars, and this since the beginning of the year. This unbalances our foreign exchange reserve, pushing banks to reassess their premium”.

The deterioration of the trade deficit, the rise in the energy bill and the price of imported goods therefore presage the worst in terms of foreign exchange reserves in Morocco. For the time being, there is no particular fear. Foreign exchange reserves amount to 328 billion dirhams, covering more than 6 months of imports of goods and services. But is it tenable, the deficit in trade in goods, already established at 91 billion dirhams during the first four months of the year, is likely to widen?

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