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Nigeria Must Lower Interest Rate, Cut Debt To Boost Growth – Lawmaker

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Nigeria needs to lower its interest rate and cut
domestic debt to stimulate lending for private sector investment, in
order to boost growth after its economy slipped out of recession, a
lawmaker said in a motion. 

The central bank on
Tuesday held interest rates at 14 percent to keep liquidity tight. The
bank said it felt that loosening would worsen inflation and drive bond
yields negative which could lead to a capital flight and hurt the
currency. 
Africa’s biggest economy grew out of
recession in the second quarter as oil revenues rose, but the pace of
growth was slow, suggesting the recovery is fragile. 
In
a motion read out in the Senate on Tuesday, Yahaya Abdullahi, said the
exit from recession was largely due to favourable oil prices and
increased domestic production with relative peace in the restive Niger
Delta. 
But it had cost the country $9 billion
to stabilise the naira, which hit a record-low of 520 against the dollar
in February. The naira was stabile at 305.80 on the official market,
while it traded at 360 for investors. 
Abdullahi
urged the government to take steps to improve policies to avoid
slipping into another recession, saying that the situation was
reversible. 
He asked the central bank to focus
on its core job of monetary policy and not development finance and
coordinate with government on getting credit flowing to the real sector. 
The
central bank said on Tuesday it expects growth to strengthen by the
first quarter of next year, by which time, effects of current policy
would have filtered through. 
The government on Tuesday asked the
Senate to amend its spending law to enable a debt program to settle 2.7
trillion naira ($8.6 bln) worth of obligations including pensions and
salary arrears, to help revive the economy. 
 
Reuters

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