Tinubu to CBN: Cut interest rates to boost economy

A national leader of the All Progressives Congress (APC), Bola Ahmed Tinubu asked the Central Bank of Nigeria (CBN) to lower interest rates to boost the nation’s economy in view of the impact of COVID-19 pandemic.

The former Lagos State governor who made the call in a statement on Sunday, also urged the Federal Government to demand a renegotiation of existing loans or debt relief from the World Bank and other development finance institutions.

“The economic fallout from the coronavirus may present the best, most pressing case for revising the CBN’s high interest rate policy. The undue rates penalise domestic investment and consumer borrowing,” Tinubu said.

The APC leader said Nigeria reduce rates Tinubu if it wants investment borrowing to attain levels that actually increase private-sector growth and job creation.

He emphasised that high interest rates as well as unreliable power supply combine to form a steep obstacle to sufficient real-sector investment, growth and productivity.

“On one hand, high rates are used to scare domestic investment borrowing, thus undermining income, production and consumption,” Tinubu said.

“On the other hand, high interest rates are used to attract foreign creditors who must be repaid with an increasing percentage of our intake of dollars.”

According to him, other central banks all major economies had driven their prime interest rates below one per cent and nearer to zero per cent.

“These central banks are lending vast amounts at low rates just to support their industries and firms,” he said.

“My position has always been one of reticence to foreign denominated-debt due to repayment challenges.

“However, if we need foreign currency to buy items essential to protecting the nation from the coronavirus, now is the time to borrow.

“The World Bank and other DFIs have said they will grant loans at concessionary rates. We should hold them to their words and demand a renegotiation of existing loans or debt relief.”

Tinubu said the financial authorities should consider formulating regulations that banks must reduce the high interest rates on existing business loans to the new lower general rate.