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Morocco trims subsidies on gasoline and diesel

September 16, 2013

RABAT, Morocco (AP) — Morocco trimmed subsidies Monday on gasoline and diesel as it tries to get its public finances into shape.

Much of this low income kingdom of 32 million relies on subsidies to survive, raising fears that cutting them could spark social unrest — the former junior coalition partner in the government is trying to mobilize support against the reduction in the subsidies.

This is the second time the moderate Islamist Party running the government has had to cut fuel subsidies since it was elected in late 2011. There was little popular outcry when it first did it in 2012.

Minister of General Affairs Najib Boulif said that the price of gasoline would now be 12.77 dirhams per liter ($5.76 per gallon), an increase of 0.59 dirhams, while diesel had risen to 8.84 dirhams per liter, up by 0.69 dirhams.

The prices will be reassessed twice a month and adjusted according to the price of oil on the world market.

Morocco’s budget deficit rose to 7.6 percent of its annual gross domestic product in 2012 partly due to the rising cost of subsidies, which have gone up every year, reaching $6.3 billion in 2012.

Fuel oil will also increase 662.88 dirhams, to 5,328 dirhams per ton.

There were no changes to subsidies on cooking gas, flour and sugar. In its original announcement of the reform, the government said the price of gasoline and diesel would not be allowed to increase too much.

The International Monetary Fund made cutting subsidies a condition of its $6 billion loan to Morocco in 2012 but the reform was delayed by opposition inside the Islamist-led governing coalition.

Over the summer, the conservative Istiqlal (Independence) Party pulled out of the government coalition, forcing its five government ministers to resign, over the reform.

“Since this decision of the government will destabilize the country, we will resort to all peaceful means to protest against it,” according to a party statement Monday. “We call on all citizens to mobilize and confront this government.”

Istiqlal spokesman Adel Benhamza told The Associated Press that the party was planning on coordinating protests with other political parties and groups.

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Associated Press reporter Smail Bellaoualli contributed to this report.

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