According to the High Planning Commission (HCP), Moroccan consumer prices are likely to rise 3.1% this year, compared with 3.8% in 2007, as subsidies on fuel and basic foods offset soaring world commodity prices.
Year-on-year inflation was 5.4% in May. Finance Minister Salaheddine Mezouar (pictured above) last month forecast annual inflation of 2.7% to 2.9%, up from an initial estimate of 2.0%.
The HCP said inflation would be below the rate in many developing countries because of the state subsidies, which would cost more than MAD 40 billion this year, way ahead of the MAD 15 billion foreseen in the 2008 finance law.
Morocco imports all of its petroleum needs and around half its grain.
The subsidies shield the country from high imported fuel and commodity prices and allow the 14% of Moroccans who live in poverty to feed themselves.
The IMF said last month the cost of the subsidies could double as a share of GDP this year to reach about 5%, more than the government spends on investment.
"This raises questions over the ability of the state to continue absorbing imported inflation at a time when the imperatives of human development still require large financial resources," the HCP said on Wednesday.
The state-run body forecast economic growth of 6.2% in 2008, in line with a recent government forecast, with non-farm growth slowing to 5.2% from 6.2% in 2007.
Tags: Moroccan Morocco Fes, Maghreb news
1 comment:
A really interesting story. Much of the world's inflation today is as a result of higher oil prices, so controlling the oil price that consumers pay through government oil subsidies effectively reduces wider inflation (which would otherwise disproportionately affect the poor through higher transport and hence food prices). Question is, can the state continue to absorb the cost of this without reducing funding in other areas or building up debt for future generations (who are going to pay the price of our subsidised oil consumption both in terms of environmental costs and higher taxes to pay off the cost of todays oil subsidies!). Very complex issue.
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