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An evaluation of the 2014 subsidy reforms in Morocco and a simulation of further reforms (English)

Under increasing budget pressure, Morocco carried out an extensive set of subsidy reforms in 2014 and is planning for further reforms for 2015–2017, which will eliminate most consumers' subsidies. This paper evaluates (ex post) the 2014 reforms and simulates (ex ante) the impact on household welfare, poverty, and the government budget of the total elimination of subsidies. The paper considers food and energy subsidies and estimates direct and indirect effects using SUBSIM, a subsidies simulation model designed by the World Bank. It finds that the 2014 reforms have been a good mix of reforms from a distributional, welfare, poverty, and government budget perspectives. They are perhaps the most rational reforms undertaken in the Middle East and North Africa region in recent years. The analysis also finds further reforms costly for the poor and more complex from a political economy perspective, especially for liquefied petroleum gas.


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    Verme,Paolo, El Massnaoui,Khalid

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    Policy Research Working Paper

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    Middle East and North Africa,

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    An evaluation of the 2014 subsidy reforms in Morocco and a simulation of further reforms

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    elimination of subsidy;Electricity;political economy of reform;household budget survey;increase in prices;subsidized products;petroleum product;water and electricity;removal of subsidy;price of sugar;price of diesel;liquefied petroleum gas;official poverty line;domestic consumption tax;soft drink industry;distribution of subsidies;social protection policy;household consumption survey;international commodity price;production of electricity;structural adjustment program;industrial fuel oil;impact of reforms;liberalization of prices;change in poverty;taxes on gasoline;reform household;price of gasoline;increase in inequality;elasticity of consumption;impact on poverty;household expenditure distribution;impact of subsidies;source of revenue;subsidy system;household welfare;edible oil;price shock;liquid petroleum;government saving;baseline data;food product;government revenue;poverty increase;soft wheat;water tariff;oil price;price indexation;unit price;price structure;Oil Refining;tariff block;Cash Transfer;government budget;state budget;household data;expenditure share;border price;domestic price;tariff structure;sale price;retail price;price differential;water sector;average price;acquisition price;individual products;real impact;simulation analysis;consumer price;domestic production;diesel prices;production input;distribution company;petroleum sector;wholesale price;electricity subsidies;higher subsidies;large subsidy;poor household;commercial transport;specific taxes;inequitable distribution;real value;implicit assumption;accurate estimate;water consumption;poverty headcount;water billing;direct transfer;storage capacity;water system;budget transfer;intermediary product;financial situation;food industry;oil shock;deregulation policy;equalization fund;financial balance;annual quota;targeted population;household consumers;positive impact;Water Subsidies;upper bind;product price;relative increase;production capacity;relative change;fuel product;middle class;freight cost;rural area;Price Subsidies;domestic enterprise;relative weight;energy source;transport service;local market;unit increase;import price;compensation mechanism;energy subsidies;public fund;import liberalization;production cost;stabilization fund;war effort;production process;national industry;sugar price;sugar industry;open access;capital expense;support price;subsidy policy;related subsidies;lump-sum transfer;price rise;fiscal balance;budget amount;fiscal deficit;government's budget;local price;tax levy;fishing activity;heavily dependent;import duty;national refinery;competitive price;price change;pricing system;full liberalization;partial liberalization;jet fuel;oil sector;electricity production;fob price;historical landmarks;access cost;distribution margin;price stabilization;evaporation losses;thermal changes;social cost;filling station;development policy;transport provision;high custom;average household;government spending;moroccan dirham;electricity price;baseline information;welfare effect;water price;pricing mechanism;Macroeconomic Statistics;cane sugar;electricity energy;target price;import subsidy;government subsidy;



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Verme,Paolo El Massnaoui,Khalid

An evaluation of the 2014 subsidy reforms in Morocco and a simulation of further reforms (English). Policy Research working paper,no. WPS 7224,Impact Evaluation series Washington, D.C. : World Bank Group.