Writer: Abderrafie Zaanoun
Since 20 May 2024, the Moroccan government has been dismantling what remains of the Compensation Fund (La Caisse de Compensation) by partially reducing state subsidies on butane gas prices. This follows the removal of subsidies on liquid petroleum products since 2015 and is supposedly aimed at reallocating funds to support the financial sustainability of direct cash transfers to the poor, which are expected to have a budget of about $3 billion by 2026.
The government recognizes that the compensation system benefits the rich more than the poor. However, dismantling this system, which constitutes the last citadel of the Welfare State, would harm the living conditions of poor and middle-income groups, especially given the limited measures in place to address the negative repercussions of this reform, in light of fuel price liberalization, which has already weakened the purchasing power of low-income individuals.
This paper examines the narratives surrounding the abandonment of universal subsidies and the argumentative frameworks to justify the reform of the compensation system in Morocco while highlighting its economic and social implications. It also seeks to anticipate the effects of this structural shift on the balances of the social fabric, as it results in deepening the socio-economic disparities between beneficiaries and those adversely affected by the removal of financial support for basic commodities.
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