The East African Community (EAC) partner states must speed up monetary
union talks and conclude the negotiations by the end of this year.
The talks have dragged on since early last year, according to Dr Enos
Bukuku, the deputy secretary-general in charge of planning and infrastructure,
and the 2012 target for concluding the Monetary Union Protocol cannot be
deferred.
“All the partner states delegates should do their utmost to build
consensus quickly so that the negotiations are concluded in time,” he said in a
speech read on his behalf by EAC’s Director for Planning, Mr Tharcisse Kadede,
on Monday as the eighth round of the talks kicked off in Arusha. The talks
started in January 2011.
“Use the latest round of negotiations to resolve outstanding issues and
to move with greater speed to ensure an agreement is reached before the end of
this year.”
The deputy secretary general asserted that the benefits of the Customs
Union and the Common Market were too great to be trifled with and they were
“more than ready” to embark on reducing the cost of doing business by attaining
a monetary union.
He added: “I am, therefore, obliged to remind you that many East
Africans within and beyond the region anxiously await any insights from this meeting on what needs to
be done right to make monetary integration work for the EAC.”
The six-day meeting has been convened to discuss outstanding matters
from previous meetings of the High Level Task Force (HLTF) negotiating the
draft protocol and also to deliberate on Articles 60 - 72, which touch broadly on financial
arrangements, integrated financial management system and transitional
arrangements.
The draft articles up for discussion this week are particularly
critical because they underpin the integration of the financial sector, which
will be a key enabler of the monetary union.
The HLTF comprises senior officials from the partner states’ ministries
of finance, planning and economic development and EAC affairs, as well as
central banks, capital markets authorities, insurance and pensions regulatory
agencies and national statistics offices.
Previous rounds of negotiations deliberated on provisions touching on
the scope of the monetary union, the macroeconomic policy framework, monetary
policy framework, exchange rate policy and exchange rate mechanism and
instruments of monetary control.
The negotiations started in January 2011. The process for the establishment of the East
African Monetary Union is underpinned by Articles 5 and 82 of the EAC Treaty
which require the partner states to undertake to establish a monetary union and
to co-operate in monetary and fiscal matters.
The primary rationale for a monetary union is to reduce the costs and
risks of transacting business across the national boundaries of those countries
which comprise the union.
By embracing a single currency, EAC partner states would remove the
costs of having to transact in different currencies and the risk of adverse
exchange rate movements for traders and travellers alike within the region.
It is envisaged that the
monetary union will deepen the integration of East African economies and
enhance the benefits to be derived from the EAC Common Market.
To enrich the negotiations, the EAC commissioned various studies, which
included a study on the review of the EAC macroeconomic convergence criteria
and one on a harmonised monetary policy framework for the region, both done
jointly by the EAC and the International Monetary Fund.
The draft final reports of both studies are due for review by the
Sectoral Council on Finance and Economic Affairs (SCFEA) in September 2012
before they are forwarded to the HLTF.
Another study on a common exchange rate mechanism undertaken jointly
with the International Growth Centre (IGC) has since been considered and
adopted by the Sectoral Council on Finance and Economic Affairs and was
forwarded to the HLTF as one of the inputs for the negotiation process.
The negotiating team, known as the High Level Task Force will, over the
six-day period, discuss outstanding matters in Articles 1-59 of the draft EAMU
Protocol and negotiate draft Articles 60-72.
Source: The Citizen,http://www.thecitizen.co.tz, reported by Zephania Ubwani
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