Legislative Assembly adopts EA monetary union report

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By Christabel Ligami, Special Correspondent

In Summary

• The East African Legislative Assembly has adopted the report of the Committee on Communication, Trade and Investment on the East African Monetary Union
• The roadmap of the EAMU provides for its implementation over a ten year period within which the single currency shall be realized

The East African Legislative Assembly has adopted the report of the Committee on Communication, Trade and Investment on the East African Monetary Union (EAMU).

The Assembly maintained that the EAMU was a defining moment for the integration process and said that the region needed to move with haste to fully implement the Customs Union and the Common Market Protocols which will pave way for entry of the single currency.

The roadmap of the EAMU provides for its implementation over a ten year period within which the single currency shall be realized.

An exchange rate policy will be implemented over a convergence phase and the conversion of exchange rates shall be formulated by the Council of Ministers.

“Ideally, the pre-requisites for the EAMU pre-suppose the implementation of the Customs Union and the Common Market, integration of financial systems, harmonization and co-ordination of statistics and macro-economic policy,” says the report.

A mechanism for surveillance, compliance and enforcement, establishing an inflation ceiling of 8 per cent and indicative criteria including fiscal deficit ceiling of 6 per cent shall also be put in place.

“The Committee responsible for finalization of the Monetary Union Protocol needs to meet and liaise closely with the policy leaders including the Ministers and the Economists in order to ensure a common position on sticky matters”, said James Ndahiro Rwanda EALA MP.

“There are complex issues to deal with and this take time. It is therefore necessary that we harmonise pre-requisites in time. I am pleased the Protocol allows for three Partner States to progress at a given time and this shall not delay the Monetary Union,” he added.

Frederic Ngenzebuhoro, Burundi EALA MP said that the single currency was an important component of the Monetary Union capable of helping East Africans.

However the Chairperson of Council of Ministers, Shem Bageine said the phased mode of the Monetary Union Protocol would enable Partner States to eventually converge.

“We are at different paces in development and we are not expected to catch up overnight”, the Minister said Mr Bageine. “If all works well, we may have a single currency in a shorter period,” he noted