Morocco considers compensation fund reform
2008-01-04
In the face of rising oil prices and increasing demands, Morocco's government is considering an overhaul of its programme of subsidies on consumer goods.
By Sarah Touahri for Magharebia in Rabat – 04/01/08
 [Getty Images] Subsidies on products such as flour have the greatest impact on the poor who depend on cheap bread for their meals. |
Morocco's long-running compensation fund has come under fire from critics seeking to reduce government spending. The fund's operating budget has ballooned from 3 billion dirhams in 2002 to 20 billion for the current year, which led parliamentarians to press for reform during their discussions of the 2008 finance law.
The fund – first established in 1941 to make European products available in Morocco at reasonable prices – has evolved into a broad programme of subsidies on consumer goods and petroleum and gas. Advocates of the policy stress the universal benefits of subsidies, as they affect all citizens, both rich and poor. The relative value of such assistance, however, is greatest for the poorest citizens.
The compensation fund is becoming more and more of a burden on State finances. Economics professor Karim El Hafi told Magharebia the programme's current cost (20 billion dirhams) constitutes nearly two-thirds of Morocco's investment budget. "We need to revise the current compensation system to make [the fund] more effective, and in the medium term to introduce mechanisms which will bring direct assistance to citizens who are in need, because the cost of basic commodities is rising all the time," he said.
Parliamentarian Abdelhamid El Mernissi said Moroccans should not expect money to be available for the compensation fund over the coming year. "Looking to 2009, I think Moroccans have to understand that this institution cannot be milked endlessly for cash. We already know who is benefiting, but how to resolve their problem is quite a different matter. It requires serious thought."
The finance ministry has announced that in 2008 it will seriously consider an overhaul of the compensation fund, in order to improve performance for the poorest Moroccans.
The main thrust of the reform will concentrate on several aspects: control, intermediary organisation, revision of the tariff structure and re-organisation of the sectors involved. The government is currently laying the groundwork for a new compensation system; one that takes the experiences of other countries around the world and adapts them to Morocco's specific needs.
In the interests of reducing the fund's burden on the national budget, the government has told citizens to expect no additions to the list of subsidised products: petroleum, butane gas, sugar, sunflower oil and flour.
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noureddine Posted 2008-01-04
It is time for Morocco to re-examine its subsidisation policies. The targeted population is not benefiting from these subsidies, most notably from the subsidisation of sugar, wheat and butane. Why?... because those products which the low-income population (net worth) takes home are less important than those of the mid and high-income population, not to even mention businesses. We need to think about income subsidies for the poorer populations. And, this will even cost less. This is an idea to look into.
FASKA DADSY Posted 2008-01-05
First of all, he has not positioned himself such that one can truly know which party he is for. The remark made by Abdel Mernissi about the “milking cow”, whose “beneficiaries we already know” are quite ambiguous. Moreover, he has made some venomous advances. What he does not know is that by eliminating the compensation fund poor Moroccans are going to start killing each other. I can make the advance that such a mindless gesture will be in favour of terrorism itself.
youssef Posted 2008-01-15
There is a disconnect between the economic reality and the motivation between university, institution, higher-education candidates. In other words, our economic situation is a series of theoretical problems in need of study and, thus, innovative solutions leading to improvement. Morocco guards rigid, classical reform strategies that in no way diverge from imitating the theoretical proposals developed for and valid in countries with completely different economic functions than ours.
شط اولاد عبو Posted 2008-01-21
About the compensation fund, it shouldn’t be removed because it contributes to subsidies for basic products. But there should be reconsideration of the means of forwarding support to those who deserve it instead it serving as an illegal way to become rich.
KASMI ALAOUI Abdallah Posted 23 days ago
It is indeed time to review the list of things subsidised by the state and, as we go along, to make progress in removing subsidies in cases where alternatives are possible. For example, we could revise the rising cost of butane by encouraging the acquisition of equipment for solar-powered water-heaters and ovens in rural zones. These are appropriate technologies for several countries as has been proven. Please, let us develop towards renewable energy: the success rate is very good if we attack with several alternatives.
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