Morocco ends petrol, fuel oil subsidies

 18 Jan 2014 - 0:47

RABAT: Morocco said yesterday it had ended subsidies of petrol and fuel oil and started to cut significantly diesel subsidies as part of its drive to repair public finances.
But the government, keen to avoid the kind of social unrest that toppled several North African regimes during the Arab Spring, said it would continue to subsidise wheat, sugar and cooking gas used by the poor. 
The cash-strapped North African kingdom is under pressure from International Monetary Fund and World Bank to cut spending and reform subsidies, taxation and its pension system.
Demands are linked to a two-year, $6.2bn precautionary credit line agreed by IMF in 2012.
“Petrol and fuel oil are no longer among the products subsidised by the government,” the General Affairs Ministry said in a statement carried by the state news agency MAP.
Morocco is the most advanced among North African countries in its reform of subsidies and started last year to partially index energy prices to international market levels.
On Thursday, nearby Tunisia’s outgoing Islamist-led government announced it had suspended planned oil price hikes after protests and strikes over high living costs.
Morocco said subsidies for diesel would decline from a level of 2.15 dirhams per litre this month to 0.80 dirham by October.
Morocco has budgeted for 30bn dirhams worth of food and energy subsidies for 2014, down from 42bn last year and more than 53bn in 2012.
But subsidy reductions could hurt the fragile economy heavily reliant on tourism, agriculture and remittances from Moroccans abroad.
The main Islamist opposition movement, Justice and Spirituality, urged leftist groups last year to join protests against subsidy cuts. But so far there has been little sign of widespread public discontent over the measures. 
ReutersRABAT: Morocco said yesterday it had ended subsidies of petrol and fuel oil and started to cut significantly diesel subsidies as part of its drive to repair public finances.
But the government, keen to avoid the kind of social unrest that toppled several North African regimes during the Arab Spring, said it would continue to subsidise wheat, sugar and cooking gas used by the poor. 
The cash-strapped North African kingdom is under pressure from International Monetary Fund and World Bank to cut spending and reform subsidies, taxation and its pension system.
Demands are linked to a two-year, $6.2bn precautionary credit line agreed by IMF in 2012.
“Petrol and fuel oil are no longer among the products subsidised by the government,” the General Affairs Ministry said in a statement carried by the state news agency MAP.
Morocco is the most advanced among North African countries in its reform of subsidies and started last year to partially index energy prices to international market levels.
On Thursday, nearby Tunisia’s outgoing Islamist-led government announced it had suspended planned oil price hikes after protests and strikes over high living costs.
Morocco said subsidies for diesel would decline from a level of 2.15 dirhams per litre this month to 0.80 dirham by October.
Morocco has budgeted for 30bn dirhams worth of food and energy subsidies for 2014, down from 42bn last year and more than 53bn in 2012.
But subsidy reductions could hurt the fragile economy heavily reliant on tourism, agriculture and remittances from Moroccans abroad.
The main Islamist opposition movement, Justice and Spirituality, urged leftist groups last year to join protests against subsidy cuts. But so far there has been little sign of widespread public discontent over the measures. 
Reuters