Morocco Adds $2 Billion Budget Buffer as Energy Shock and Floods Strain Economy

Mintesinot Niggusie

The Moroccan government plans to allocate an additional 20 billion dirhams, about 2 billion US dollars, in its 2026 budget to cushion the domestic economy from the spillover effects of the Middle East conflict and other external shocks, according to a government source.

The funding increase comes as the country faces renewed pressure from global energy market disruptions triggered by the conflict, which have pushed up the cost of imports for Morocco, a net importer of oil, gas and coal with no domestic refining capacity.

The additional budgetary resources are intended to strengthen reserve funds to protect household purchasing power and stabilise key subsidised services, including cooking gas, transport and electricity tariffs, government spokesman Mustapha Baitas noted.

The measures also extend to recovery spending linked to floods that hit northern parts of the country during the winter, alongside other contingency costs tied to global economic volatility.

Despite external inflationary pressures, the government expects Morocco’s economy to grow by 5.3 percent this year, up from 4.6 percent last year, supported by a rebound in agriculture following improved rainfall after seven years of drought.

Officials also project the fiscal deficit to narrow by 0.5 percentage points to 3 percent, supported by stronger growth and tax revenues, while public debt is expected to decline to around 66 percent of gross domestic product.