The Federal Government is considering a temporary suspension of import duties on staple food items, drugs, and other essential goods for an initial period of six months in an effort to curb inflation. This initiative is outlined in an Executive Order titled, “Inflation Reduction and Price Stability (Fiscal Policy Measures) Order 2024,” which is expected to be signed by the President.
According to a document obtained by thepunch, the order also includes provisions to waive levies on fertilizers, poultry feed, flour, and grains. Additionally, the Ministry of Finance and the Central Bank of Nigeria will be tasked with devising plans to offer low-interest loans to the agriculture, pharmaceutical, and manufacturing sectors.
The document specifies that import duties and tariffs will be suspended for six months on staple food items, raw materials for manufacturing, agricultural inputs like fertilizers and chemicals, pharmaceutical products, and more. The President is also expected to suspend the Value-Added Tax on certain goods, including automotive gas oil, basic food items, semi-processed foods like noodles and pasta, and agricultural and pharmaceutical products, until the end of the year.
Further, the Executive Order will suspend various taxes and levies for six months, including road haulage tax, fees on transportation-related charges, business premises registration, and taxes on shops and markets. The government is also considering the importation of paddy rice and maize to address the rising food inflation, as recommended in the Accelerated Stabilisation and Advancement Plan (ASAP) report.
The report suggests that the import duty and VAT on specified items, including paddy rice, be suspended to combat food inflation. This proposed plan appears to conflict with earlier statements by President Tinubu, who had emphasized the importance of turning domestic shortages into abundance and reducing food imports.
Nigeria is currently facing a severe food crisis, with food inflation reaching 40.5 percent. Rice, a staple food, has seen prices increase by 169 percent over the past year, placing significant strain on households and the economy. It is estimated that around 31 million Nigerians could face severe food shortages by August.
In addition, President Tinubu plans to discontinue the payment of taxes and levies in foreign currency through an executive order. To ease the pressure on the naira, the order will require all levels of government and their agencies to prioritize the procurement of goods and services produced locally .
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, praised the stabilization plan, highlighting its potential to address critical economic issues. He emphasized that the plan includes comprehensive fiscal policy measures that could ease inflationary pressures and benefit real sector investors.
The Federal Government may also need to borrow an additional N7.24 trillion in 2024 to fund this economic intervention plan. This would be in addition to the N9.18 trillion already planned to cover the year’s deficit, bringing the total borrowing for 2024 to N16.42 trillion. This borrowing is expected due to anticipated revenue shortfalls and the need for incremental spending to support the intervention efforts.
