The king of Morocco accepted the resignation of cabinet ministers from the junior party in the ruling coalition.
Five ministers from the conservative Istiqlal party quit this month, arguing that the senior partner,the moderate Party of Justice and Development (PJD) was hurting the poor by reducing food and fuel subsidies too fast.
When Hamid Chabat, the leader of the Istiqlal Party pulled out of the government, he called for royal arbitration, a move that might have led to the downfall of the PJD, which won elections in 2011 following Arab Spring-inspired demonstrations.
However Moroccan King Mohammed VI approved the resignations, showing support to The Prime Minister Abdelilah Benkirane's reform agenda.
"This will allow the prime minister to begin consultations to form a new coalition," said the royal statement on Tuesday.
The palace also urges the resigning ministers to manage their affairs until new ministers are nominated to take over their departments allowing the head of the government to carry out discussions for a new majority.
Benkirane already has held discussions with Salaheddine Mezouar, leader of the National Rally for Independents, a liberal party known for providing technocratic ministers and with nearly the same number of seats as the departing Istiqlal
Morocco defused Arab Spring-style protests in 2011 with a combination of social spending, harsh policing and constitutional reforms that paved the way for the PJD to come to power.
However, last year the government agreed to implement economic reforms including deregulating many prices of staple goods in return for a two-year, $6.2bn precautionary credit line from the IMF.
Nevertheless, the planned subsidy cuts have been delayed until after the current Muslim holy month of Ramadan.