On the removal of energy products subsidies in an importing oil country: Impacts on prices and policy implications in morocco

Using input-output model,we analyze the effect of removing energy subsidies on prices in morocco. we set three scenarios of increasing oil prices by 25%,50% and 75%. we show that the effects on inputs prices are high in intensive oil products sectors such as transports,manufacturing industries,fishing and aquaculture,and,electricity and water sectors; with respectively 19.6%,13.4%,9.5% and 8.1% for 75% oil price increase scenario. using the weights of the sectors,we deduce the overall cost increase generated by direct and indirect requirements for the total economy. an increase in oil prices by 75% generates an overall increasing cost between 5.5% and 8%. the generated cost-push inflation may alter the stable path of inflation recorded over the past fifteen years putting pressure on the monetary authorities. therefore,the change of strategy from fixed exchange rate regime towards a flexible regime is an urgent option. © 2016,statistical economic and social research and.