Higher energy prices caused by the Strait of Hormuz crisis are putting more pressure on Morocco’s government finances. Fitch Ratings expects the central government deficit to reach 4% of GDP in 2026, up from 3.5% in 2025. Higher spending on butane subsidies, transport support and the public electricity and water sector is driving the increase.
Fitch says higher energy prices have increased the cost of subsidies, including “more butane compensation and support for transport workers”. The government also needs to provide more money to the national electricity and water operator.
Tax reforms, better reporting and stronger tax collection have helped government revenues. Those gains are no longer enough to fully offset the higher energy-related costs.
Butane is one of the main ways higher international energy prices reach the government budget.
The state keeps domestic butane prices below the cost of imports through the Caisse de Compensation. When international prices rise, the government absorbs part of the increase instead of passing the full cost on to households.
Fitch expects higher butane compensation payments, continued support for transport workers and larger transfers to the electricity and water sector to increase government spending in 2026.
The International Monetary Fund had already highlighted this risk in its March 2026 assessment of the economic impact of the Middle East conflict.
Energy imports accounted for 6.3% of GDP in 2025. They included refined petroleum products, natural gas and coal.
The IMF calculated that a roughly 20% increase in energy prices compared with its original scenario would worsen the current account deficit by 0.9 percentage points of GDP, or about $1.4bn.
The IMF also said that “higher energy prices and uncertainty would deteriorate the terms of trade and erode real household income.”
Fitch expects the current account deficit to reach 3.8% of GDP in 2026, compared with 2.5% in 2025.
A higher energy import bill and weaker European demand are expected to drive the increase.
Strong phosphate exports and tourism revenues should offset part of the pressure.
Brent crude closed at $104.82 a barrel on 17 September. Reuters reported that only four cargo-carrying vessels passed through the Strait of Hormuz on 18 September, compared with an average of 16 over the previous 10 days.
The disruption is affecting more than the price of oil. Longer shipping routes, supply problems and higher costs for securing energy supplies are also making imports more expensive.
Morocco depends heavily on imported energy, with energy import dependency historically around 90%.
The disruption has also affected other imported industrial materials. Sulfur from Gulf countries, which is used by important industries such as fertiliser production, has faced supply pressure.
Fuel prices pass 15 dirhams a litre
Fuel prices have also risen sharply at Moroccan petrol stations.
Diesel is now selling at around 15.30 to 15.35 dirhams a litre, while petrol is around 15.20 dirhams.
Brent was trading at about $70 a barrel before the conflict began. Prices later crossed $100 as the Strait of Hormuz became heavily disrupted.
During the initial shock in March, Brent prices reached peaks of between $126 and $144 a barrel, depending on the benchmark and spot market.
Prices have since moved between roughly $98 and $109 a barrel. That is around 40% to 50% above pre-crisis levels.
The government has spent about 3bn dirhams, or roughly $330m, a month on emergency support linked to the energy shock, according to the figures cited in the analysis.
The money has been used to limit the rise in domestic butane prices, support transport operators and reduce pressure on public electricity costs.
Government targets support instead of broad fuel caps
The government has continued to use targeted financial support rather than introducing broad price caps at petrol stations.
Transport operators have received several rounds of financial assistance through the Mouakaba platform. The latest support includes professional road transport operators and “gros rouleurs”, or heavy transport users.
The aim is to reduce the impact of high fuel costs on transport companies and prevent higher logistics costs from feeding into food and other consumer prices.
The government also continues to cover part of the higher import cost of butane through the Caisse de Compensation.
Fitch expects the pressure on public finances to ease if energy prices fall and conditions around the Strait of Hormuz return to normal.
The agency forecasts an average government deficit of 3.4% of GDP in 2027 and 2028.
That forecast depends partly on exceptional Hormuz-related spending coming down and energy prices returning closer to normal levels.
The fiscal pressure comes as government investment remains high. Fitch expects capital spending to average about 7.5% of GDP.
Central government debt is projected to reach about 67% of GDP in 2028. The median for countries with a BB rating is expected to be around 51%.
Fitch also sees a risk that higher-than-expected costs or new demands for government support could add further pressure to public finances.
Strong phosphate exports, tourism revenues, foreign exchange reserves and a good agricultural season are helping absorb some of the shock.
But the Hormuz crisis has exposed how quickly higher energy costs can move from international markets into government spending, fuel prices, household purchasing power and the wider economy.
