Tinubu could suspend import duties on food and medicines

The US government may have launched a plan to suspend payment of import duties on staple foods, medicines and other essential goods for an initial period of six months in a bid to curb inflation, reports The PUNCH.

This is contained in an executive order expected to be issued by the President entitled “Inflation Reduction and Price Stability (Fiscal Policy Measures) Order 2024.”

The document seen by our correspondent did not contain the President’s signature, but was due to be signed in April.

The document also includes plans to abolish taxes on fertilizers, poultry feed, flour and grain.

The executive order directs the Ministry of Finance and the Central Bank of Nigeria to develop a plan to provide soft loans to the agricultural, pharmaceutical and manufacturing sectors.

“Import duties and other tariffs will be suspended for six months on the following products: staple foodstuffs; raw materials and other direct inputs; inputs for agricultural production including fertilizers, seedlings and chemicals; pharmaceutical products, poultry feed, flour and grain,” the document said.

The President is also expected to suspend VAT on diesel, certain staple and semi-processed foods such as noodles and pasta, raw materials for food production, electricity and public transport, as well as agricultural inputs and products and pharmaceutical products for the rest of the year.

“Suspension of certain taxes and duties: The order provides for the suspension for six months of various taxes and duties, such as road freight tax and other transport-related fees; fees for bicycles, trucks, canoes, wheelbarrows and carts; business registrations; taxes and duties on shops, kiosks and markets; animal trade and agricultural sales tax.”

In its report on the accelerated stabilization and progress plan, the government is considering importing paddy rice into the country in addition to maize.

The ASAP report recommended an executive order for the import of paddy rice to millers to curb the growing food inflation across the country.

The document also recommends: suspending import duties and VAT on certain goods, including imports of paddy rice by millers, and fixing the import duty at the exchange rate

However, the federal government’s proposed plan contradicts Tinubu’s previous statements on food imports from earlier this year.

At an event with the national leaders of the All Progressive Congress, Tinunu said his government would not allow food imports but would transform the country’s shortages into abundance.

“Farmers are currently being supplied with fertilizers. Agriculture and economic diversification are the answer to our problems.

“We will not continue to import food. We know how to turn scarcity into abundance and the world will watch us do it again,” he said.

Nigeria is facing a looming food crisis that is testing the country’s stability. Food prices have skyrocketed and food inflation has reached 40.5 percent.

Among the worst affected commodities is rice, a staple food. In the past year alone, rice prices have shot up by 169 percent, reaching almost 90,000 naira per bag in March and April. This sharp increase in food costs is placing a huge burden on households across the country and further exacerbating an already fragile economy.

It is estimated that around 31 million Nigerians could be affected by severe food shortages by August this year.

In addition, Tinubu plans to stop the payment of taxes and duties in foreign currency by presidential decree.

To reduce pressure on the naira, the regulation also requires all levels of government and their agencies to give priority to the procurement of goods and services “Made in Nigeria”.

The document states, among other things: “Governments at all levels and their agencies should, to the extent possible, promote goods and services MADE IN NIGERIA.”

“Payment of taxes and levies in foreign currency shall be suspended to enable payers to pay in naira, while non-critical expenditure plans of MDAs involving foreign currency costs shall be put on hold. States and local governments are encouraged to support these tax suspensions to ensure broad-based relief for businesses and consumers.”

Chairman of the Board of Directors of the Center for the Promotion of Private Enterprises, Dr. Muda Yusuf, praised the stabilization plan, saying that if implemented, the plan will solve the pressing economic problems of investors in the real sector.

In an interview, Muda said: “The proposed accelerated stabilization and development plan is a laudable proposal by the finance minister. It addresses many of the burning economic issues that concern investors in the real sector.

“The plan contains robust and comprehensive fiscal measures that real economy actors have been demanding over the past year. It addresses investor concerns about high interest rates, high costs of handling cargo at ports and high import tariffs.

“Easing import tariffs on key raw materials for manufacturers would calm raging inflationary pressures in the economy, particularly food inflation. The fiscal measures reflect the government’s response to investor concerns in the real economy. We call for speedy implementation of the plan once it is approved by the President.”

Meanwhile, the federal government could borrow another 7.24 trillion naira in 2024 to finance its economic stimulus plan.

This was announced during a presentation by Finance Minister Wale Edun of the ASAP plan, which aims to address key challenges related to the reform initiatives and stimulate development in various sectors of the economy.

The government already intends to borrow 9.18 trillion naira to finance its deficit this year. Intervention financing will cost another 7.24 trillion naira, bringing the total debt for 2024 to 16.42 trillion naira.

This borrowing is expected due to an expected delay in revenues and the government acknowledges that the additional expenditure that would be incurred through the intervention funds would impact leverage metrics if they were financed solely through additional borrowing.