Moroccans hail new plan for direct financial aid

2008-08-04

Since oil and food subsidies may fail to reach the country's poorest citizens, Morocco is overhauling the Caisse de Compensation to provide eligible families with direct aid to pay for necessities.

By Sarah Touahri for Magharebia in Rabat – 04/08/08

[Sarah Touahri] In order to address concerns that its subsidies of oil and food are failing to benefit the poorest of the poor, Morocco's Caisse de Compensation plans to provide direct aid to certain families.

Skyrocketing oil prices have reignited debate in Morocco over reform of the Caisse de Compensation, a government fund used to stabilise petrol prices. Oil subsidies for 2008, originally projected at 20 billion dirhams, will cost an estimated 40 billion instead. The government says the current system has shown its limitations, with the wealthiest 20% of the population receiving 75% of the benefits of subsidies while the poorest 20% see just 1%.

Prime Minister Abbas El Fassi announced an overhaul of the Caisse de Compensation on June 30th, telling the press that the changes are intended to provide more help to those most in need. Under the new approach, aid will be granted directly to poorer families provided they make a commitment to send their children to school and look after their health. The amount of aid to be given is still under consideration, but the government has said it will be in the region of 500 dirhams.

"The Caisse de Compensation has had to cope with numerous changes over the last few decades," said El Fassi during his announcement, "but the current situation is extraordinary with precipitous rises in the prices of basic necessities and oil".

At the same press conference, Minister of Economic and General Affairs Nizar Baraka said the government will rely on international experience in the field of subsidies and a national debate to shape the new programme, adding that poverty, not geography, will be the criterion for direct financial subsidies.

Many have welcomed the new initiative to help poorer families. Housewife Rkia Ouardi heard about the measure and is waiting eagerly for it to come into effect. "I work as a housekeeper for a family and earn 600 dirhams a month, which is not enough to bring up my four-year-old. Luckily I live with my parents. I really need this support so I can look after my son properly," she said.

Samir Mabrouk, a teacher in rural Morocco, told Magharebia that when the initiative becomes reality, a large number of families living in the countryside will start sending their children, especially girls, to school.

"A lot of girls miss out on their education due to poverty. They're made to work for less than 500 dirhams a month. This support will encourage families in rural areas to make life different for them," he said.

Abderrazak Mesoudi, a bank employee, wonders what criteria will be used to decide who is eligible for aid: "Nearly 10% of the population lives in abject poverty, but due to the rising cost of living, even households with an income of 5,000 dirhams per month can be regarded as poor, especially if subsidies for essential items are stopped… I wonder whether the government is aware of the discontent that will cause."

Some believe the amount of aid announced is too low and will not be enough for needy families. Nasrine Badri, a nurse, says that the government should give aid at least equivalent to the monthly minimum wage of 1,800 dirhams so that people can cover their daily living expenses.

The government contends that all angles are being considered. A team of Moroccan experts is consulting a number of other countries to decide how the Caisse de Compensation should be run in the future. Indonesia, Chile and Brazil will be looked at as part of a benchmarking exercise. Plans are in development to improve the way subsidies are targeted at the population and to recover fuel subsidies mistakenly paid to those not targeted.

Another idea is to raise road tax for some categories of personal vehicles. The government says that discussions are already under way with regard to possible methods of implementing the reform and that it will be ready for implementation towards the end of this year.