The state-owned Compensation Fund has spent an estimated MD15.2bn ($1.9bn) in subsidies this year, less than half the figure for the previous year, according to the Economic & General Affairs Ministry.

The fund is used by the government to keep the price of stable goods, such as oil, butane gas and sugar, low.

In 2008, the fund spent MD33.5bn. The government has allocated MD14bn for the fund in its 2010 budget.

Rabat is planning to reform its subsidies system in an effort to cut the cost of the programme and target aid at the most vulnerable groups.

The government says it expects to run a budget deficit of 4 per cent in the coming year, based on an average oil price of $75 a barrel.