The minister of finance, Kemi Adeosun, has urged the Central Bank of Nigeria (CBN) to lower benchmark interest rates in order to lower debt servicing costs for the government, which plans to increase local borrowing to boost the economy.
Adeosun disclosed this at a meeting of business leaders in Abuja yesterday.
The minister had last week announced the planned injection of N350 billion into the economy to pull it out of recession.
Speaking with CNBC Africa yesterday, the minister said she wanted the CBN to reconsider its decision at the July Monetary Policy Committee (MPC) meeting which saw a hike in benchmark interest rate from 12 per cent to 14 per cent.
She also disclosed that the Securities and Exchange Commission and the Pension Commission had approved plans to enable the investment of as much as $20 billion of pension fund in the development of the country’s infrastructure.
She said,
Analysts are optimistic that the MPC would hold rates as a hike in rates would further put more pressure on the ailing economy and a cut will send negative signal to investors.
Adeosun said the Finance Ministry was working with the Debt Management Office, Nigeria’s sovereign wealth fund and the pension industry to issue an infrastructure bond to raise money for road and housing projects, although she did not elaborate.
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| The minister of finance, Kemi Adeosun. |
Adeosun disclosed this at a meeting of business leaders in Abuja yesterday.
The minister had last week announced the planned injection of N350 billion into the economy to pull it out of recession.
Speaking with CNBC Africa yesterday, the minister said she wanted the CBN to reconsider its decision at the July Monetary Policy Committee (MPC) meeting which saw a hike in benchmark interest rate from 12 per cent to 14 per cent.
She also disclosed that the Securities and Exchange Commission and the Pension Commission had approved plans to enable the investment of as much as $20 billion of pension fund in the development of the country’s infrastructure.
She said,
“A new instrument that will allow pension funds to invest in infrastructure bonds; that’s what will drive, for example, our social housing and our roads programme outside the budget.”The Monetary Policy Committee of the CBN commenced its meeting in Abuja yesterday and would hold a press briefing at the end of the meeting today, to announce its decisions.
Analysts are optimistic that the MPC would hold rates as a hike in rates would further put more pressure on the ailing economy and a cut will send negative signal to investors.
Adeosun said the Finance Ministry was working with the Debt Management Office, Nigeria’s sovereign wealth fund and the pension industry to issue an infrastructure bond to raise money for road and housing projects, although she did not elaborate.
“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 was to manage inflation and the trade-off for the economy right now is, what is 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 told CNBC.Culled from www.leadership.com
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