Morocco adds $2 billion subsidy

Morocco is adding 20 billion dirhams, about $2 billion, to its 2026 budget after higher import costs raised pressure on subsidized energy and transport prices. Fouzi Lekjaa, minister delegate in charge of the budget, presented the extra appropriations to parliament’s finance committee on May 18, according to local reports and industry coverage. The government linked the move to the economic spillover from the Middle East conflict and the rise in global energy prices. The added spending is meant to keep support in place for butane gas, electricity and transport while covering other exceptional costs. ### Where is the money going? Fouzi Lekjaa said 8 billion dirhams of the additional funding would go to the compensation system to help hold down prices for butane gas, electricity and passenger and freight transport. MEES and Hespress both reported that allocation from Lekjaa’s presentation to lawmakers. Another 6 billion dirhams is earmarked for exceptional expenditures tied to international developments that were not included in the original 2026 finance law, Hespress reported. A further 4 billion dirhams will recapitalize public institutions and state-owned companies, while 2 billion dirhams is set aside for reconstruction and emergency spending after floods in northern Morocco earlier this year. (mees.com) ### Why is Rabat intervening now? Morocco is highly exposed to imported energy costs because it relies on foreign supplies for much of its fuel. MEES said the government tied the latest package to the economic impact of the Middle East war and to disruption in global energy supplies after the closure of the Strait of Hormuz since early March. (en.hespress.com) The government’s stated aim is to cushion households and businesses from higher fuel and freight costs rather than allow those increases to pass through fully into domestic prices. Reuters, cited in secondary pickup reports, said the extra budget allocation was designed to stabilize domestic prices and protect purchasing power as import costs rose. (mees.com) ### Which prices are being protected? The clearest protected items are butane gas, electricity and transport. Lekjaa said the 8 billion dirham allocation would support stable prices for those categories, according to the accounts of his May 18 presentation. (msn.com) Transport support matters beyond household commuting because freight costs feed into broader consumer prices. The package therefore reaches both families and businesses through regulated or subsidized energy use and through transport costs that affect supply chains, according to the government’s description of the measures in local coverage. (mees.com) ### How will Morocco pay for the extra spending? Tax revenue growth in the first four months of 2026 gave the government room to finance part of the package. Lekjaa said tax receipts rose by 10.9 billion dirhams, or 8.9% year on year, by the end of April, helped by a 24.9% rise in corporate tax revenue of about 9 billion dirhams and a 1.2 billion dirham increase in value-added tax revenue. (en.hespress.com) Despite the added spending, Lekjaa said the government still expects the budget deficit to narrow to 3% of gross domestic product in 2026 from 3.5% a year earlier. He also said treasury debt was projected to keep falling toward 66% of GDP. ### What happens next? (en.hespress.com) The government council has already adopted the decree opening supplementary appropriations for the 2026 budget, according to local reports. The next practical step is implementation of the added credits through the remainder of 2026, with the compensation fund, transport support and flood-related spending among the named uses. (en.hespress.com 1) (en.hespress.com 2)