Economy

Morocco prepares $2 billion budget increase to contain price pressures

Saturday 16 May 2026 - 08:37

By: Dakir Madiha

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Morocco is preparing an additional MAD 20 billion, or roughly $2 billion, for its 2026 budget as authorities seek to shield the domestic economy from the effects of ongoing instability in the Middle East. The planned spending package aims to maintain stable energy and transport prices while supporting households facing rising import and living costs.

Government officials said the additional funds would help preserve purchasing power as disruptions in global energy markets continue to affect oil and gas prices. Morocco remains heavily dependent on imported fuel, including oil, coal, and natural gas, while the absence of domestic refining capacity has increased the country’s exposure to international supply shocks linked to regional tensions.

Government spokesman Mustapha Baitas confirmed that reserve funds could be activated if market volatility continues. The measures under discussion include subsidies designed to stabilize prices for cooking gas, electricity, and public transportation. Moroccan authorities have increased support spending over recent years to reduce the social impact of inflation and imported energy costs.

Part of the new budget allocation will also finance recovery efforts after winter floods damaged several northern regions of the country. Officials indicated the additional resources could cover other emergency expenditures related to international economic uncertainty. Last month, Budget Minister Fouzi Lekjaa stated that subsidies supporting electricity tariffs and transport prices were costing the state nearly MAD 648 million per month.

Despite external pressures, the Moroccan government continues to project economic growth of 5.3% in 2026, compared with 4.6% the previous year. Officials attribute the stronger outlook partly to improved agricultural production after abundant rainfall ended a prolonged drought cycle that had affected harvests and rural activity for seven consecutive years.

Authorities also expect public finances to improve during the year. The fiscal deficit is projected to narrow to 3% of gross domestic product, supported by higher tax revenues and stronger economic activity. Public debt is also expected to decline to around 66% of GDP as Morocco attempts to balance social spending with fiscal stability during a period of global economic uncertainty.