The cost of the subsidy system in Morocco peaked at 6.6 percent of gross domestic product (GDP) in 2012, an amount larger than the country's total investment budget for that year. Direct subsidies to households in 2013 (October 2013 prices) are estimated at DH34.4 billion (US$4.1 billion, or 3.9 percent of GDP). Replacing direct subsidies with a universal per capita annual cash transfer of DH749 (US$90) would leave the poverty rate unchanged, while reducing direct subsidies to DH24.6 billion (2.8 percent of GDP). It is possible to reduce direct subsidies further by targeting only a part of the population, down to DH2.4 billion (0.3 percent of GDP), if only the poor were targeted. However, to implement selective targeting, the government of Morocco will need to substantially strengthen its social protection system.
Details
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Author
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Document Date
2014/02/01
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Document Type
Brief
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Report Number
84516
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2014/02/05
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Disclosure Status
Disclosed
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Doc Name
Reforming subsidies in Morocco
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Keywords
Poverty Reduction & Economic Management;subsidized products;government revenue;increase in prices;social protection system;Cash Transfer;distribution of subsidies;direct subsidy;subsidy system;Direct Subsidies;free market price;impact on poverty;import of goods;headcount poverty index;general equilibrium framework;high oil price;price of gasoline;gross domestic product;change in poverty;social protection mechanism;effect of price;partial price indexation;household expenditure;budget deficit;cooking oil;liquid petroleum;government budget;fiscal space;expenditure share;world price;household welfare;equalization system;
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Citation
Araar,Abdelkrim El Massnaoui,Khalid Verme,Paolo
Reforming subsidies in Morocco (English). Economic premise,no. 134 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/621831468053942440/Reforming-subsidies-in-Morocco