(Adds budget minister)
By Chijioke Ohuocha and Alexis Akwagyiram
LAGOS, Sept 19 Nigeria's central bank should
lower interest rates so that the government can borrow
domestically to boost the economy, which is stuck in recession,
without increasing its debt-servicing costs, the country's
finance minister said on Monday.
The government also planned an "immediate large injection of
funds" though asset sales, advance payments for license renewals
and infrastructure concessions, its budget minister said.
Finance Minister Kemi 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. She did not elaborate.
She said she wanted the central bank to reconsider its July
interest rate increase, which it implemented to help support the
naira and attract foreign investment.
The central bank, which is independent of the government, is
due to announce its next rate decision on Tuesday. Economists
polled by Reuters last week predicted that the central bank
would keep its key interest rate at 14 percent and reiterate its
focus on resuscitating the economy.
"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," Adeosun told CNBC Africa.
"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."
Africa's biggest economy slid into recession for the first
time in more than 20 years in the second quarter. The naira was
quoted at a record low of 425 per dollar on the black market on
Monday, which it touched last week as chronic hard currency
shortages continued to hurt businesses.
Budget Minister Udoma Udo Udoma told a business conference
the government planned asset sales to inject more funds into the
economy but gave no details. The government has spent almost 800
billion naira ($2.54 billion) on capital expenditures since the
budget got approved in May, officials have said.
He also said the government had almost finished preparing a
bill asking parliament for emergency legislation powers to
improve the business climate.
Adeosun said some adjustment was needed to narrow the spread
between the official and black market currency rates, which is
running at 25 percent since 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," she said.
($1 = 315.0000 naira)
(Additional reporting by Felix Onuah and Oludare Mayowa;
Writing by Chijioke Ohuocha and Ulf Laessing; Editing by Larry