Casablanca – Morocco has approved additional budget appropriations totaling $2.06 billion for 2026, with a significant share directed toward preserving household purchasing power through continued subsidies for butane gas and transportation.

The supplementary funding, announced by Fouzi Lekjaa during a presentation before the Finance and Economic Development Committee in the House of Representatives, is intended to address a range of urgent fiscal needs while maintaining the government’s commitment to macroeconomic stability.

The measure comes as Morocco continues to navigate an uncertain international environment marked by fluctuating commodity prices, inflationary pressures and climate-related disruptions. Government officials say the additional resources will help absorb these shocks without undermining the country’s fiscal consolidation objectives.

Support for household purchasing power

The largest component of the supplementary budget is an allocation of $825 million to the Compensation Fund, which finances subsidies for essential products and services.

According to the government, this funding will be used to maintain stable prices for butane gas cylinders, widely used by Moroccan households for cooking and heating, as well as to support passenger and freight transportation costs.

By preserving these subsidies, authorities aim to cushion consumers and businesses from potential price increases and limit the impact of international market volatility on domestic living costs.

Funding for exceptional expenditures

An additional $619 million will be used to cover exceptional expenditures that were not included in the original 2026 Finance Law.

These costs are linked primarily to changes in the global economic environment, including higher prices for imported goods and other unforeseen pressures on public finances.

The government said this allocation is designed to provide flexibility in responding to external developments while ensuring that key public services and investment programs remain adequately financed.

Capital reinforcement for public institutions

The supplementary budget also includes $412 million to strengthen the capital base of selected public institutions and state-owned enterprises.

This support is intended to reinforce the financial position of strategic public entities and enable them to continue implementing investment programs in sectors such as infrastructure, transport, utilities and public services.

The move aligns with Morocco’s broader efforts to improve the governance and performance of state-owned enterprises while ensuring they retain sufficient financial capacity to fulfill their mandates.

Flood recovery in northern Morocco

A further $206 million has been earmarked to finance expenditures related to floods that affected several regions in northern Morocco.

These funds will support reconstruction, rehabilitation of damaged infrastructure and assistance to affected communities.

The allocation reflects the increasing budgetary demands associated with climate-related events and the government’s emphasis on rapid response and recovery.

Strong tax revenue growth

Officials said the supplementary appropriations are being made possible by stronger-than-expected tax revenue collection.

By the end of April 2026, tax revenues had increased by approximately $1.12 billion, representing a year-on-year rise of 8.9%.

This performance corresponds to roughly 35% to 36% of the annual revenue target established in the 2026 Finance Law.

The improvement was driven mainly by a sharp increase in corporate income tax receipts, which rose by about $928 million, or 24.9%, compared with the same period a year earlier.

Value-added tax revenues also increased by approximately $124 million, representing a 3.9% rise.

The government attributes this momentum to sustained economic activity, tax administration reforms and the continued expansion of the tax base.

Fiscal consolidation continues

Despite the additional spending, Moroccan authorities say the country remains on track to improve its public finance indicators.

The government expects the budget deficit to narrow to 3% of gross domestic product in 2026, down from 3.5% in 2025.

Treasury debt is also projected to continue its gradual decline, reaching approximately 66% of GDP.

These targets are part of Morocco’s broader strategy to balance social support and public investment with prudent fiscal management.

Revenue trends reflect structural improvements

The Ministry of Economy and Finance highlighted the steady strengthening of state revenues over recent years.

Between 2021 and 2025, ordinary state revenues increased at an average annual rate of 13.5%, while tax revenues expanded by an average of 12.4% per year.

Officials say these results reflect the impact of tax reforms, improved collection mechanisms and measures to broaden and diversify the tax base.

This trend has enhanced the sustainability of public resources and provided greater room for the government to respond to economic and social priorities.

Balancing social protection and budget stability

The additional $2.06 billion in budget appropriations underscores Morocco’s effort to combine social protection with fiscal discipline.

By maintaining subsidies for essential products, supporting public institutions and addressing climate-related emergencies, the government seeks to reduce the immediate burden on households while sustaining long-term economic stability.

At the same time, stronger tax revenues and continued progress in deficit and debt reduction indicate that Morocco is pursuing these objectives within a framework aimed at preserving the resilience of public finances.