(3 Minutes Read)
Morocco is racing against time to implement a series of crucial reforms before February 2024, aiming to secure the final tranche of a USD 1.3 billion loan from the International Monetary Fund (IMF). The IMF is scheduled to conduct its third and final review of the agreement in mid-February, with a decision on the disbursement of the remaining USD 437 million expected in March. Morocco has already received two installments of the loan this year.
The Moroccan government’s commitments include overhauling the electricity market, imposing taxes on polluting substances, enacting legislation to conserve water, and publishing three-year projections of the country’s debt and the impact of climate change on the banking sector.
Key reforms involve setting a tariff for renewable energy producers to access the medium-voltage distribution network and separating the financial accounts of the National Office of Electricity and Drinking Water (ONEE) for production and transmission activities. This move aims to strip the government-owned entity of its production authority, transforming it into a mere electricity transmission operator.
Facing an unprecedented water crisis, the Ministry of Water and Equipment is working on legal measures to protect groundwater resources. A study on the cost of water is underway to be followed by the enactment of laws to safeguard groundwater, particularly after a significant decline amid the country’s longest-ever drought.
The central bank is mandated to issue directives compelling banks to prepare reports on the climate change risks to their operations. The Ministry of Economy and Finance has pledged to publish regular reports on the government’s debt levels and the impact of climate change on its activities.
The IMF has stipulated that Morocco introduce new taxes to address climate change, including increasing the value-added tax on fossil fuels. However, the government has opposed this measure due to its potential impact on household disposable income, especially amid rising unemployment, food prices, and significant changes to the social protection system. As an alternative, the government has proposed increasing taxes on coal and heavy fuel oil used in electricity generation by eliminating the existing tax exemption for the National Office and its partner companies. The government also plans to raise taxes on other petroleum products like bitumen used in construction and lubricating oils.
Read Also:
Morocco also intends to adopt a carbon tax. The government has informed the IMF that it will implement the tax in 2026, following the approval of legislative amendments granting the Moroccan Institute of Standardization the authority to issue carbon content certificates and training customs officials to monitor the implementation of the tax on imports.
