RABAT - The Moroccan government plans to ​add 20 billion ⁠dirhams ($2 billion) to its 2026 budget to finance measures to ‌cushion the impact of the Middle East conflict on the domestic market, a government ​source told Reuters on Thursday.

The source requested anonymity because it was not authorised to ​speak publicly, ​and spoke after government spokesman Mustapha Baitas announced the measure to reporters without specifying the value of the additional funding.

The unprecedented ⁠energy supply disruption that has resulted from war in the Middle East is particularly painful for Morocco, which imports most of its oil, gas and coal needs and has no domestic refining capacity.

The budget adjustments aims ​to "allocate necessary ‌reserve funds to ⁠address potential consequences ⁠should the current situation persist, particularly in relation to supporting citizens' purchasing power," Baitas ​told reporters.

The measures include subsidies to keep ‌prices of cooking gas, transport services and electricity ⁠stable, he said.

The additional funds would also finance measures to address the impact of floods that hit northern parts of the country this winter, as well as covering other unforeseen expenditures linked to the repercussions of the international economic context, he said.

Despite imported inflationary pressures, the government expects the economy to grow 5.3% this year, from 4.6% last year, boosted by an improvement in the agricultural sector following abundant ‌rainfall that ended seven years of drought.

It also ⁠expects to cut the fiscal deficit by ​0.5 percentage points to 3% this year, on improved growth and taxes, while cutting government debt to 66% of GDP.

Subsidies to stabilise public transport prices ​and electricity tariffs ‌cost about 648 million dirhams ($70.6 million) per month, Budget ⁠Minister Fouzi Lekjaa said ​last month.

(Reporting by Ahmed El Jechtimi; Editing by Alistair Bell)