RABAT, July 12 (Reuters) - Increasing oil prices and international protectionism are putting pressure on Morocco’s economy as it prepares a 2019 draft budget, the government said on Thursday.
“Next year will be fraught with challenges relating to increasing protectionist tendencies in the international economy and rising oil prices,” the cabinet said in a statement.
Morocco is the largest energy importer in the region, spending 70 billion dirhams ($7.39 billion) in 2017.
“This year’s budget was based on $60 dollars per barrel although the average price in international markets rose to $73,” government spokesperson Mustapha El Khalfi told reporters at a weekly press conference.
Central bank Governor Abdellatif Jouahri said last month that higher oil prices and geopolitical conflicts may have an “immediate impact” on Morocco’s finances, especially in terms of borrowing costs.
A slump in private investment, falling tax revenues, demands for improved public services and the need to boost citizen’s purchasing power pose added challenges, the government said.
Morocco’s national planning agency expects the economy to grow by 2.9 percent in 2019, down from 4.1 percent in 2017 and a forecast 3.1 percent this year.
The 2019 growth forecast is based on slowing foreign investment and a drop in agricultural revenues.
The government is facing additional pressure from a consumer boycott campaign that recently pushed Sidi Ali bottled water company and the Moroccan branch of France’s Centrale Danone to issue profit warnings.
Boycotters complaining about prices also targeted fuel distributor Afriquia, part of billionaire agriculture minister Aziz Akhannouch’s Akwa group.
Morocco liberalised the oil sector in 2015 under pressure from international lenders, but has maintained subsidies for wheat, sugar and cooking gas. (Reporting by Ahmed Eljechtimi Editing by Aidan Lewis and Cynthia Osterman)