Morocco braces for deepening budget, trade deficits on back of global economic uncertainties

The surge of commodities prices and its impact on subsidized products augurs ill for the Moroccan economy which has to prepare for a deepening budget and trade deficits.

The price of oil has increased from an average of $70 per barrel to $120 while wheat prices tripled, smashing a record high of $375/t as the war in Ukraine chokes trade.

Morocco, a major African wheat and oil importer, expects its trade deficit to widen eating into its foreign currency reserves which cover near 7 months of imports.

The subsidies cost is set to implode as the country continues to control soft wheat and cooking gas oil.

Morocco has imported from Ukraine wheat, corn and plastic products for a total cost of 2.7 bln dirhams and has exported 677 million dirhams of fertilizers, cars and fisheries.

With Russia, the trade deficit was bigger. Morocco sold 654 million dirhams worth of citrus, fruits and sugar while it imported 13 billion dirhams, including mainly gas, gasoline, fuel oil and ammoniac.

Wheat traders say Morocco has wheat stockpiles covering five months of consumptions, other wheat importers urge the government to exceed five months in light of dim prospects for this year’s domestic wheat harvest.

Morocco suffered this year its worst drought in thirty years that has compromised the wheat harvest.

Amid the geopolitical tensions and its impact on prices in the global market, Morocco is expected to exceed the 16 billion dirhams that it has earmarked to support bread, cooking gas and sugar prices.