East African Bunge lays down road map to monetary union

The East African Legislative Assembly (Eala) has proposed measures towards implementation of the Monetary Union protocol, it was revealed in Bujumbura as the House ended its two week session.

These are to include establishing a mechanism for surveillance, compliance and enforcement, an inflation ceiling of eight per cent and indicative criteria, including fiscal deficit ceiling of six per cent.

Presenting the report, an Eala member, Ms Angela Kizigha (Tanzania), said once in place the protocol would promote and sustain sound and prudent policies related to money issues in the region.

The road map provides for its implementation over a ten year period towards the single currency realisation.

At the same time, the exchange rate policy shall have a convergence phase. The conversion rates shall be formulated and irrevocably fixed by the Council of Ministers, which is the policy organ of the EAC.

Ideally, the prerequisites for the Monetary Union presupposes implementation of the Customs Union and the Common Market, the integration of financial systems, harmonisation and coordination of statistics and macro-economic policies.

The proposed institutional framework under the protocol envisages the establishment of the EA Monetary Institute, the central bank as well as a number of institutions dealing with statistics, finance, surveillance and compliance.

According to Ms Kizigha, the report was prepared by the EAC Committee on Communications, Trade and Investments (CTI). Eala maintained that the envisaged protocol was a defining moment for the integration process.

Another member, Dr James Ndahiro (Rwanda), said EAC needed to protect itself from external shocks and to avoid situations that were a replica of what happened in the EU especially Greece and Spain.

“It is necessary we harmonise prerequisites in time. I’m pleased to note that the protocol allows for three partner states [sic] to progress at a given time and this shall not delay the Monetary Union,” he said.

Mr Frederic Ngenzebuhoro (Burundi) informed the House that the single currency was an important component of the Monetary Union capable of helping East Africans to realise their aspirations.

Another MP, Mr Abdul Harelimana (Rwanda), was optimistic that the Monetary Union would be realised and suggested that at an appropriate time a unifying name for the currency be sought.
He further reckoned that all efforts were needed to address the issue of currency conversion.

A Ugandan legislator Dan Kidega said the principle of variable geometry was increasingly becoming an important component of the integration process.

He called for better management of statistics so as to give a true and factual picture of the Monetary Union and thus enable the complexities to be demystified.

Mr Christophe Bazivamo (Rwanda) called for the fast-tracking of the pillar while Mr Peter Mathuki urged the leaders and legislators of East Africa to ‘walk the talk’ when it comes to implementation of pillars of integration.

Mr Abdullah Mwinyi (Tanzania) said the pillars of the integration were inter-related and needed to be chronological (Customs Union, Common Market and the Monetary Union). He noted that the region lacked a single customs territory.
Source: The Citizen, reported by Zephania Ubwani from Arusha, Tanzania
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