As the Monetary Policy Committee, MPC, of the Central Bank of Nigeria, CBN, kicks off its two day meeting in Abuja yesterday, the Finance Minister Mrs. Kemi Adeosun has urged apex bank to help lower interest rates on bank credit to enable government borrow domestically to boost the economy, , without increasing its debt-servicing cost.
Adeosun, in an interview with CNBC explained that government needed lower interest rates, as high interest rates increase cost of debt service and reduces the amount of money that is available to spend on capital projects.
“The attempt was to manage inflation and the trade-off for the economy right now is what a bigger problem is: Is it growth or inflation? Forme it is growth. I would rather seek growth. We can manage inflation. I think for us, at the moment in the Nigerian economy, growth is the most important thing”, she said.
According to the Minister, the government is planning “immediate large injection of funds” though asset sales, advance payments for license renewals and infrastructure concessions. She explained that her ministry was also working with the Debt Management Office, the Sovereign Wealth Investment Authority and the pension industry to issue an infrastructure bond to raise money for road and housing projects.
Adeosun said she would want the CBN to reconsider its July interest rate increase, which it implemented to help support the naira and attract foreign investment.
It would be recalled that the Budget and Planning Minister, Senator Udoma Udo Udoma, hadtold a business conference that the government planned asset sales to inject more funds into the economy.
He confirmed that government had almost finished preparing a bill asking parliament for emergency legislation powers to improve the business climate.
The finance minister said some adjustmentwas needed to narrow the spread between the official and black market currency rates, which is running at 25 percent since the apex bank floated the naira.
“We still need to make some necessary adjustment to ensure that the spread is narrow, so that we have true price discovery,” she said.
Meanwhile, the CBN would today announce its new MPR rate, even as many economists had predicted that the apex bank would keep its key interest rate at 14 percent and reiterate its focus on resuscitating the economy.