S&P Global Ratings recommends tax measures in Morocco

Rising commodity prices due to the Russian-Ukrainian conflict are driving up food prices in Middle Eastern and North African economies.

Like other countries in the MENA region, Morocco is affected by the economic fallout from the conflict, as its economy is highly dependent on food and energy imports, and it derives much of its grain supply from Russia and Ukraine. This is indicated by a new report from S&P Global Ratings on the subject.

As a result, the international rating agency believes that the Moroccan government should use tax programs to cushion the impact of the Russian-Ukrainian crisis on food prices, whether through subsidies or other forms of support. “All this now seems inevitable given the weight on the agri-food scene of the countries involved in the conflict. Russia and Ukraine together account for almost 60% of world exports of sunflower oil, more than 25% of wheat and almost 15% of corn. In addition, Russia and Belarus are major producers of fertilizers”, it is underlined.

The expensive energy import bill in Morocco

According to S&P, Lebanon and Jordan are the most exposed, as they spend more than 10% of their GDP on energy and food imports. Food and especially energy imports are also important for Tunisia.

For Morocco, S&P Global Ratings reports that the energy import bill is one of the largest as a percentage of GDP in the sample of 35 emerging markets analyzed globally.

However, the agency believes that Morocco’s position as a major potassium exporter goes some way to mitigating this problem. Nevertheless, continues the same source, its economy is certainly vulnerable to ongoing developments in food markets, given its heavy dependence on grain imports.