Three years ago, Morocco managed to avoid the revolutions that brought down dictators in Tunisia and Egypt. One way the Moroccan government bought social peace was by spending 20% of its budget to subsidise the cost of bread, fuel and electricity.
But that spending has since spiralled out of control – Morocco’s deficit ballooned to 7.1 % of its gross domestic product (GDP) in 2012.
Now, in a deal with the International Monetary Fund (IMF), the country will have to bring its deficit down to three percent by 2017, largely by cutting subsidies.
In January, Morocco ended some fuel subsidies but stopped short of a full reform by keeping subsidies on sugar, butane and wheat.
Moroccans like Rabat shopkeeper Yezza El Mehini, 47, fear drastic repercussions if further cuts are put into place.
“Every business is going to stop, and we’re going to be in a crisis. I don’t want a crisis,” she said.
It has happened before. In response to IMF cost-cutting measures in 1981 and 1984, thousands protested and hundreds were killed in Morocco. More recently, violent protests swept Jordan in November 2012 after fuel prices increased, and deadly riots hit Khartoum in October 2013 when fuel subsidies were removed.
Eighty-year-old Mohammed Guerouani, a Rabat shopkeeper who sells traditional Moroccan clothes, remembers Morocco’s riots in the 1980s and fears impending price increases. “[Moroccans] can never accept this,” he said.
In September, when Morocco partially tied gas and diesel prices to the world market, triggering price increases, thousands protested around the country’s parliament building. Forty-five-year-old taxi driver Anass Goumi felt the pinch.
“I’m not happy because of this. Naturally, the price of the fares increase. It’s not a simple thing for me,” he said.
Morocco is not the only country facing these pressures. Countries in the Middle East and North Africa (MENA) spend more government money subsidising fuel than any other region in the world, and they rely heavily on food subsidies.
MENA countries spent $212bn on subsidies in 2011 alone, or 7.2 percent of the region’s GDP, according to the IMF.
But high subsidy spending is not confined to this region: The US is the world’s largest subsidiser in absolute terms, spending $502bn to subsidise energy sources in 2011, according to the IMF.
Timur Kuran, a Duke University professor who studies Middle Eastern economic history, notes subsidies constrain a country’s ability to spend on social services that could actually reach the poor.
additional reporting agencies
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