By Modupe Gbadeyanka
Minister of Finance, Mrs Kemi Adeosun has advocated for a lower interest rates in order to boost domestic borrowing by the government.
Mrs Adeosun made this known in an interview.
The Minister said she was working with the Debt Management Office (DMO), the Sovereign Wealth Fund (SWF) and the pension industry to issue an infrastructure bond to raise money for road and housing projects.
She noted that lower interest rates will allow the government to take on more local loans without increasing the burden of debt servicing.
Mrs Adeosun expressed confidence that the government can spend its way out of recession, but warned that the import driven nature of the economy means the challenge of foreign exchange will be difficult to resolve.
Her position is coming just when the Central Bank of Nigeria (CBN)’s Monetary Policy Committee (MPC) concludes its meeting in Abuja.
The Committee is expected to hold rates as the country struggles with recession and high inflation.
“We need lower interest rates. If we drive the economy and there is growth, that is the payback. I would rather seek growth, we can manage inflation, let’s stimulate the economy.
“Our economy is largely import driven so we are always going to have problem. At the moment we still have two rates for the Naira, it needs to be resolved; we need to narrow the spread. We need to move from a consumption led one, if Nigeria just does what it says it will do, which is investing in infrastructure and ease of doing business, it will be fine,” Mrs Adeosun said in the interview.
She further stressed that, “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.”