Iran war costing Morocco $330m a month in energy subsidies

Morocco is allocating MAD3 billion ($330 million) per month to subsidise spiralling energy prices following Iran’s effective closure of the Strait of Hormuz.

The country is almost entirely reliant on oil and gas imports and the allocations are putting great pressure on the national coffers, budget minister Fouzi Lekjaa said.

But he told parliament that the budget deficit would remain under control, not exceeding 3 percent of GDP with debt at 66 percent, adding that the country is banking on a sharp increase in tax revenue this year.

“We are allocating around MAD600 million a month to prevent a sharp rise in butane prices and MAD650 million to keep transport prices down besides MAD300 million to subsidise electricity,” the official news agency quoted him as saying. Total allocations cost the budget MAD3 billion a month, he said.

Lekjaa noted that oil prices have leapt 46 percent since the beginning of the Iran conflict.

Petrol prices soared 70 percent to $1,218 per tonne and butane by 33 percent to $727, he said, adding that gas prices have risen 53 percent.

“The good thing in this year’s budget is that tax revenues swelled by 8.5 percent to MAD10.4 billion in the first four months of 2026. Corporate taxes grew by 25 percent to MAD9 billion while VAT and consumption taxes also increased,” he said.

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The budget deficit grew by nearly 40 percent in the first two months of 2026.

The budget shortfall surged to nearly MAD34.5 billion in January-February, from MAD24.8 billion in the same period last year, Morocco’s economy and finance ministry said.

Officials said in early 2025 that there would be a large increase in expenditure to fund infrastructure development for the 2030 Fifa World Cup, which Morocco is to co-host with Spain and Portugal.