Morocco fuel subsidy cuts may trim growth in 2013, 2014 - agency

RABAT (Reuters) - Morocco's decision to raise energy prices may cut economic growth by 0.15 percent in 2013 and 0.48 percent in 2014 by slowing domestic demand, the state planning agency said on Tuesday. The North African kingdom raised energy prices on Monday, in the first of a series of reforms to subsidies required under an International Monetary Fund deal, which have prompted opposition groups to call for public protests. The government agreed last year to deregulate prices of many staple goods and reform pensions and taxes in return for a two-year, $6.2 billion precautionary credit line from the Fund. In July the agency cut its economic growth forecast for this year slightly to 4.4 percent, and expects it to slow to 2.5 percent in 2014 after industrial output slowed in the second quarter and remittances from overseas remained weak. Overall, reducing subsidies for energy products would improve the budget deficit by 0.18 percent of GDP in 2013 and 0.58 percent in 2014, but it would hike domestic consumer prices by 0.37 percent and 1.10 percent respectively in the same period, the agency said in a statement. The agency said its estimates were based on the case that no measures were put in place to counter the rise in costs. The government has said it is in talks to return part of the increase on diesel fuel to professional drivers in the goods and transport sector to avoid passing on the higher energy impact to consumer prices.