Rabat - Morocco is set to receive $4 billion in loans from the World Bank from 2014 to 2017 for government energy, infrastructure and other projects, a source from the World Bank said on Tuesday.
Under the deal, the bank will extend $1 billion each year to finance different projects, the source said.
Morocco is under pressure from international lenders to push ahead with reforms to its fuel and food subsidies, for tighter control over its public wage bill and its state pension payments to help narrow its budget deficit.
“The approval of the deal by the World Bank Board of Directors is expected by early 2014,” the source said.
The North African kingdom received $600 million each year under a previous 2011-2013 agreement with the bank, but its government has asked for an increase in financial support from the bank.
Reforms to subsidies are politically sensitive as they increase living costs.
A reform to fuel subsidies already helped split the ruling coalition and forced the palace to name new cabinet members as way to reaasert control of the reform programme.
Analysts believe the establishment around King Mohamed is worried that the Islamist-leaning Justice and Development party, which heads the government, plans to push though more reforms that may provoke protests over higher costs.
It is a tricky balance with international lenders demanding that Morocco do more to reduce deficits and limit public spending, which has risen as the palace seeks to calm the kind of popular discontent seen in the 2011 Arab Spring revolts.
Unlike its North African neighbours, Tunisia and Libya, where unrest ousted long-term autocratic leaders, Morocco managed to end protests in 2011 with a combination of social spending, harsh policing and constitutional reforms. But the palace is keen to avoid any renewed unrest.
In 2012, the IMF approved a $6.2 billion precautionary line of credit for Morocco over two years while urging reforms to the subsidy system, although it did not formally link the aid to any reform measures. - Reuters