A financial expert and managing director/chief executive officer of Cowry Assets Management, Johnson Chukwu, has called on the federal government to immediately reduce petrol pump price to reflect the current landing cost of about N100 per litre.
Mr. Chukwu made the call in an exclusive interview with Daily Trust in Lagos while reacting to the Central Bank of Nigeria (CBN) contingency plan to ameliorate the economic impact of the coronavirus pandemic.
The CBN had on Monday announced an extension of moratorium on loans, interest rate reduction, creation of N50billion fund, credit support for health care sector, regulatory forbearance and strengthening of loan to deposit rate policy.
Speaking on the need for fiscal authorities to complement the CBN’s move, Chukwu called on the federal government to take out subsidy on petrol.
“If we take the current landing price of N100 into account, it means we are selling at N45 higher than the landing cost and that is forcing people to pay tax to government.
“If we sell at N100, that translates to lower transport cost, lower cost of food items and that will moderate inflation,” he said.
He said the CBN’s move is very critical because in the coming months, states and local government may find it very difficult to pay salaries and that is when the impact will become severe.
He expressed concern around how the apex bank will implement the interest rate reduction and the moratorium designed to cushion the effect of slow growth.
“The lenders are the banks; if the apex bank relies on moral persuasion to get the commercial banks to reduce interest rate, it may not achieve the desired result. The CBN has to evolve an economic model such as risk sharing to give it a push,” Chukwu said.