In times of difficulties, empathetic governments often take radical actions to ease the burden of living for both consumers and suppliers. They often do so directly (increased incentives to workers) or indirectly (subsidy to suppliers or removal of charges on goods or services). The Sirleaf Administration chose the latter, this time reinforcing a spent suspension through a new executive order. The Analyst, reports.
If fuel suppliers and Liberia's lone cement manufacturer, CEMENCO, stay faithful to their shared responsibility to the Liberian consumers, gasoline and cement prices are unlikely to increase any time soon.
This is due to the new Executive Order #31, which President Ellen Johnson signed Wednesday this week, suspending a US $2.00 protective tariff on a 50 kg bag of Portland cement and on petroleum products intended for use by schools and industries not 'covered adequately' by government subsidies.
The suspension of the protective tariff, which is contained in the Revenue Code of Tariff No. 25.23, was first imposed in the now spent Executive Order No. 9.
Its purpose was, as now reinforced by Executive Order 31, is to grant incentives to certain industries in the country, such as CEMENCO, to produce more cement to meet local demands as more and more citizens and residents embark on the struggle to reorder their lives.
The government said the measure is intended to mitigate the adverse effects from the global increase of certain commodity prices, including cement, which it said were occurring also at the disadvantage of the nation's reconstruction efforts.
Regarding the impact of Executive Order No. 31 on petroleum products, the government said it needed to take steps to hold down prices to ensure the generation of electricity at reasonable cost in order to maintain an affordable balance in the cost of living for the Liberian people.
Without hydro power to run the turbines of the Liberia Electricity Corporation (LEC), government said, the corporation's sole means of power production was fuel.
It therefore believes that removing the protective tariff on petroleum products was a crucial way to address the problem of power shortage and to promote sustained power generation in the country.
The government said the lifting of the protective tariff on fuel will also help to hold constant fuel-related costs associated with the operations of government agencies and government-subsidized institutions that the Ministry of Finance has deemed not adequately covered by budgetary appropriation or subsidies.
The new executive order says those institutions and agencies already identified under that category are the National Transit Authority (MTA), the Liberia Broadcasting System (LBS), and scores of hospitals, clinics, and schools around the country, which it did not name.
The government however hopes that the measure will help hold down the cost of operation at these institution, eventually lowering or keeping cost of service constant.
It is not clear by how much weight the suspension of protective tariff on two of the nation's threshold consumer commodities will bring to bear on the ever rising prices of the nation's top three commodities-fuel and its associated high commuter fares and transportation costs; cements and its derivative high cost of rent; and rice and its derivative high cost of local produce and goods and services.
Observers are hailing the government for the bold steps taken to tackle the problems of rising prices on the Liberian market.
But they said if the Executive Order 31 is only a reinforcement of the expired Executive Order 9, then it seems there is no question that the government needs to look further parallel steps to make it effective and meaningful.
For instance, they said, some prices on the local market were beyond the capacity of ordinary Liberians to pay even while Executive Order 9 was in force. This, in their view, meant that the government needed to perform a smarter surgical operation involving import processes such the clearing of goods at the Freeport.
"The government needs to do some cuts on other imports. It needs to look at the cost of the importation of used vehicles, mainly those for commercial use; the cost of spare parts, and the cost of food items not produced in Liberia," said one observer.
Plus these, according to another observer, the government needs to strengthen security at the Freeport of Monrovia to streamline the cost of government-approved duties and cut down on unofficial 'clearance tariffs'.
"Unless the government actually does something about the corruption at the Freeport, where agents demand bribes and impose artificial clearance requirements, the lifting of protective tariff on cement and fuel may be but a sacrifice in vain," said another observer who believed that port bribery was putting more pressure on consumer prices than all government tariffs combined.
He estimates that for every dollar government puts on an imported commodity such as cement, twice that much was imposed unofficially by port agents and middlemen generally called 'brokers'.
"So, clamping down heavily on corruption at the port must accompany the new executive order. Otherwise, the government will be losing revenue without making the corresponding impact on the livelihood of the Liberian people",said yet another observer.
Whether the government will see the application of Executive Order #31 from the standpoint of observers remains to be seen, because in analysts’ view, corruption at the Freeport of Monrovia is part of the larger national problem of dishonesty in high places that has been assailing the Sirleaf Administration.
"Ending bribery at the Freeport is ending bribery nationwide, something which all Liberians agree remains a distant dream," they said, meaning to them that Executive Order #31 may be a mere scratch on the surface-like its precursor, Executive Order #9.