Morocco government raises energy prices to cut subsidies

A worker fills the tank of a car at a petrol station in Cairo
A worker fills the tank of a car at a petrol station in Cairo, March 12, 2013. REUTERS/Mohamed Abd El Ghany

RABAT (Reuters) - Morocco's Islamist government raised energy prices on Monday as it began sensitive subsidies reform needed to meet International Monetary Fund (IMF) requirements.

Five ministers from the government's junior partner party have resigned in protest over the decision to raise prices.

These include a rise in diesel of 0.69 dirhams per litre, gasoline by 0.59 dirhams per litre and fuel oil by 662.88 dirhams per tonne, distributors told Reuters.

"We have received the exact prices during the last 24 hours, but we have reached an agreement with the government almost one month ago," said one distributor who declined to be named.

Morocco aims to bring prices closer to international market levels as it keeps spending on food and energy subsidies within a budget of 42 billion dirhams for 2013, down from 53 billion in 2012.

But the move could shake the frail economy of the North African kingdom which relies mostly on tourism, agriculture and remittances from Moroccans living abroad.

The government said it would return part of the increase on diesel fuel to professional drivers in the goods and people transport sector to avoid a snowball effect on prices.

Last week, Morocco's main Islamist opposition movement urged leftist groups on Monday to join a protest against subsidy cuts and the "mismanagement" of the Moroccan regime.

Government officials could not be reached for immediate comment.

Last year the government agreed to changes including deregulating the prices of many staple goods, and reforming the pension and the taxation systems in return for a two-year, $6.2 billion precautionary credit line from the IMF.