Adeosun wants interest rate cut ahead of MPC
Minister of Finance, Mrs Kemi Adeosun has expressed the wish that the Central Bank of Nigeria (CBN) lowers interest rates so that the government can borrow domestically to boost the economy without increasing its debtservicing costs.
The Minister made the plea in an interview on CNBC Africa television, monitored by Daily Trust yesterday.
While calling on the CBN to reconsider its July interest rate hike, Adeosun said; “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,”
It would be recalled that CBN at its last MPC raised its rate to help support the naira and attract foreign investment inflows.
She also said the government might opt for asset sales next year to boost the public coffers as the economy struggles.
“Looking at 2017, how we fund the 2017 budget, I think we have started to work on that and look at a mixed strategy of debt and asset realizations,” Kemi Adeosun told CNBC Africa.
The Minister explained that the actions of the CBN is geared towards managing inflation, she however said: “the tradeoff for the economy right now is what 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.”
Adeosun said she was working with the Debt Management Office (DMO), Sovereign Wealth Fund and the pension industry to issue an infrastructure bond to raise money for road and housing projects.
She said the government is working with parliament to cut procurement timelines to get contractors back to work and inject money into the economy.
Nigeria has said before that it plans to set up a $25 billion infrastructure fund to invest in the transport and energy sectors.
The CBN is currently holding its MPC meeting in Abuja and it is due to announce its rate decision on Tuesday.