The All Progressive Congress (APC) National Leader, Chief Bola Tinubu, on Sunday urged the Central Bank of Nigeria to reduce interest rates to avoid stifling domestic investment and income during COVID-19 crisis.
Tinubu made the call in a statement in Lagos.
The APC leader said that the reduction would make the COVID-19 crisis to have a positive economic aspect.
He advised the Federal Government to avail tax reliefs that would aid financial institutions to reduce interest rates.
He said that by driving down the interest rates, the government would be saving the nation from a monumental drag on economic growth.
While noting that lower rates may have some negative short-term impact on inflation and exchange rate, Tinubu said that economic dislocations caused by new coronavirus would serve to mitigate those temporary negative consequences.
“Lower rates will increase domestic investment and production as well as create jobs.
“Undue rates penalise domestic investment and consumer borrowing. This reduces both aggregate domestic supply and, to a lesser degree, aggregate domestic demand.
“High interest rates are a fundamental drag on national economic growth.
“Lower rates will spur domestic investment and production. This creates both jobs and wealth,” Tinubu, a former Governor of Lagos State, said.
He said that high rates would serve only to suppress the vital factors.
“If there is a time to reduce interest rates, that time is now,” he said.
Tinubu said that the world understood the imperative of lower interest rates.
“We should not pretend to be blind to that which every other major nation sees.
“If this crisis is to have any positive economic aspect, let it be that we used this moment to drive down interest rates.
“To apply the rate reduction only to future loans would be prejudicial to current bank debtors.”
The APC leader urged that banks must also reduce high interest rates on existing business loans.
“This can be achieved through regulations requiring banks to automatically roll over existing loans at the lower rate if the borrower so requests,” he said.