The Minister of Finance, Mrs. Kemi Adeosun has announced that she is seeking for the Central Bank to lower interest rates to enable government borrow domestically to boost the economy, without increasing its debt-servicing costs.
Speaking to journalists in Abuja on Monday, September 18, Adeosun said she is working with the debt office Nigeria’s sovereign wealth fund and the pension industry to issue an infrastructure bond to raise money for road and housing projects.
CBN had increased its interest rate in July, which it implemented to help support the naira and attract foreign investment inflows.
She told newsmen:
“We need lower interest rates because when we are borrowing and interest rates go up, it increases our cost of debt service and it reduces the amount of money that is available to spend on capital projects.
“The attempt to was to manage inflation and the trade-off for the economy right now has become a bigger problem: Is it growth or inflation? For me 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.”
Meanwhile, it is reported that the CBN is due to announce its rate decision on Tuesday, September 20.
According to the Minister, government is working with parliament to cut procurement timelines to get contractors back to work and inject money into the economy. She explained that some adjustment was needed to narrow the spread between the official and black market currency rates, which is running at 25 percent after the central 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,” Adeosun said.