In Summary
He added: “Given the financial sector challenges in
other parts of the world, some people in our region could be skeptical
of the Monetary Union.
Arusha. Dreams of a single
currency are closer to reality after the East African Community (EAC)
Council of Ministers adopted a draft protocol on the establishment of
the Monetary Union this week.
The document has now been referred to the Sectoral Council on Legal and Judicial Affairs, which meets in Bujumbura, Burundi, next week, for legal input, the EAC Secretariat announced here yesterday.
The Council of Ministers, during its extraordinary
two-day meeting in Arusha early this week, also adopted the roadmap for
the implementation of the Monetary Union Protocol. The details of the
new roadmap, which will provide the time line for the signing of the
protocol by EAC heads of state, could not be immediately known.
Some analysts have described adoption of the draft
protocol as historic and a milestone. The draft protocol is a
culmination of rigorous negotiations that started in January 2011.
The monetary union project is, however, behind
schedule. The 11th extra-ordinary summit of EAC heads of state held in
Arusha in April resolved that negotiations on the proposed East African
Monetary Union (EAMU) should be concluded in August and the protocol
signed in November ,this year.
But the new roadmap shows that this would not be possible.
“This (adoption of the draft protocol this week)
is historical because it established the legal and institutional
framework for the EAC to progress to the third pillar of integration
which is the Monetary Union,” said the Chairperson of the Council of
Ministers, Prof Tarsis Kabwegere, who is also Uganda’s Minister in
Charge of General Duties in the Office of the Prime Minister. He said
the EAC policy organ met in Arusha “to consider the outcome of the
conclusion of the negotiations of the Monetary Union Protocol”.
EAC Secretary-General Richard Sezibera said the
people of East Africa were resolute to embrace the monetary integration
“having been energized by the benefits they had so far reaped from the
implementation of the Customs Union and the Common Market”.
He pleaded to the policy makers as well as technocrats to help
prioritize statistical and related issues which will, among others,
“make our transit to the East African Monetary Union more seamless”.
He added: “Given the financial sector challenges
in other parts of the world, some people in our region could be
skeptical of the Monetary Union. It is, therefore, your expertise to
reassure them and indeed the entire EAC that our Monetary Union is
viable and we can all cope with the possible challenges ahead.”
Achieving the common monetary policy and, therefore, a common currency is a tall order, according to experts.
How quick the common currency comes into effect
would depend on how the partner states resolved a range of issues to
pave the way for the pact. one of these issues is the harmonisation and
coordination of fiscal policies because an effective monetary union is
the one that is supported by a common fiscal policy, experts argue.
Separate fiscal policies for a country in a single monetary
union have been blamed for some of the major economic difficulties
facing the Eurozone, and the EAC could face similar problems if the issue is not handled well.
A ministerial meeting which preceded the April
summit observed that experts working on the monetary union have observed
considerable challenges with harmonisation and coordination of taxation
in the region.
“Partner states are at different levels of
economic development and, therefore, need to provide for a provision for
partner sates not to engage in harmful tax competition”, said the
report seen by The Citizen.
Dr Sezibera yesterday saluted the technocrats for
living to the expectations of the people of EA” especially at this
economically difficult period in the region. He hailed the Council of
Ministers for ushering the region into the long-awaited era of monetary
union.
The newly-appointed EAC deputy secretary general
(Political Federation) Mr. Charles Njoroge said the Sectoral Council on
the Monetary Union had a defining role to play in determining the pace, quality and dept of the EAC monetary integration.
Senior officials from the five partner states;
Tanzania, Uganda, Kenya, Burundi and Rwanda including the permanent
secretaries, Solicitors General, Governors of the central banks and all
chief executives as well as members of the High Level Task Force (HLTF)
that spearheaded the talks were in attendance.
Other challenges to a quick EAMU include the scope
of EAMU, institutions necessary for its proper functioning, the
macroeconomic convergence criteria and management of foreign reserves.
And yet other challenges include the funding
mechanism, transitional arrangements covering temporary and permanent
institutions to be established during the transitional stage.
Source: The Citizen
Source: The Citizen
