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 economic fallout from the conflict, as its economy is highly dependent on food and energy imports, and it receives most of its grain supplies 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 reduce 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 load on the agri-food landscape of the countries involved in the conflict. Russia and Ukraine together export about 60% of world exports of sunflower oil, more than 25% of wheat and about 15% of corn. In addition, Russia and Belarus are the major producers of fertilizers”, it underlined.

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 to Tunisia.

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

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

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