World Bank's $500 mn loan for Morocco's social safety nets

The World Bank said on Wednesday it had approved a $500 million loan to help Morocco with its reforms to improve social protection and access to health services.

The financing "is aimed primarily at the vulnerable populations, who have been hit the hardest by shocks Morocco has experienced since COVID-19, including drought and other climate-related risks, international conflicts, inflation, and more recently, the Al Haouz earthquake," the World Bank said.

The 6.8 magnitude earthquake that struck on September 8 killed more than 2,900 people, most of them in hard-to-reach mountainous areas.

Overall, Morocco plans to spend 120 billion dirhams on a post-earthquake reconstruction plan that includes the upgrade of infrastructure over the next five years.

The government has said it will start phasing out subsidies on cooking gas next year and will opt instead for direct cash handouts benefiting needy households.

By 2026, the government plans to spend 50 billion dirhams ($ 5 billion) annually on mandatory health coverage, financial assistance to the needy and housing aid, funded by the state budget, a solidarity tax, and the reallocation of subsidy funds.

Despite increased spending on social safety nets, the government expects the fiscal deficit to shrink to 4 per cent of GDP next year from a forecast 4.5 per cent this year.