From Ahmed Al-Jashtimi

RABAT, May 14 (Reuters) - The Moroccan government plans to add 20 billion dirhams ($2 billion) to its 2026 budget to fund measures aimed at mitigating the impact of the Middle East conflict on the domestic market, a government source told Reuters on Thursday.

The source, who asked not to be named because he was not authorized to speak publicly, spoke after government spokesman Mustafa Baitas announced the measure to journalists without specifying the value of the additional funding.

The unprecedented disruption to energy supplies caused by the war in the Middle East is hurting Morocco, which imports most of its oil, gas and coal needs and does not have the capacity to refine locally.

Paytas told reporters that the budget amendments aim to "finance measures taken to mitigate the repercussions of the war in the Middle East region, including allocating the necessary reserve funds to address the consequences should this situation continue, particularly with regard to supporting the purchasing power of citizens."

He added that the measures include providing subsidies to maintain stable prices for cooking gas, transportation services and electricity.

He said the additional funds would also finance measures to address the effects of the floods that swept through the northern parts of the kingdom this winter "and cover exceptional and unforeseen expenses related to the repercussions of the international situation."

Despite inflationary pressures from external factors, the government expects the economy to grow 5.3 percent this year, compared with 4.6 percent last year, supported by an improvement in the agricultural sector following heavy rains that ended a seven-year drought.

The government also expects the fiscal deficit to fall by 0.5 percentage points to three percent this year, thanks to improved growth and taxes, while reducing government debt to 66 percent of GDP.

Last month, the Minister Delegate in charge of the Budget at the Ministry of Economy and Finance, Fouzi Lekjaa, said that subsidies allocated to stabilize public transport prices and electricity charges cost about 648 million dirhams ($70.6 million) per month.