EAC States meet to review monetary union progress

By John Oyuke

Stakeholders drawn from the East African Community (EAC) financial sector are meeting to review developments in region’s financial markets as the deadline nears for the much-hyped region’s single currency.

EAC secretariat says the meeting in Arusha that ends Tuesday February 28, is discussing the single currency expected to be in place June 2012.

"They will discuss sustaining economic growth in the region, developments in the eurozone and lessons for the EAC as it negotiates a protocol for a monetary union," the secretariat said in a statement of the meeting being held jointly with International Monetary Fund (IMF).

EAC countries — Kenya, Tanzania, Uganda, Rwanda and Burundi — have been discussing a single currency plan covering monetary policy harmonisation and financial sector integration.

However, Rwanda has indicated it might not be part of the region’s single currency plan.

Recently, the permanent secretary in Tanzania’s ministry of East Africa Cooperation, Dr Stergomena Tax Bamwenda, hinted that the deadline for the East African countries to adopt a monetary union set for this year, might be extended - signaling the partner states unwillingness to embrace the union in earnest.

Bamwenda told a Tanzania daily that sticking issues such as budgets, inflation rate, foreign exchange reserves, government debts and exchange rates among member countries must be observed before they commit to a single currency arrangement.

She noted that the ongoing negotiations on the monetary union would consider all factors, and if not met, the countries will not embrace a single currency this year as planned.

"We are still in the process. We can’t rush to introduce monetary union until those criterion are met; even as the deadline approaches, we will not rush," she insisted.

She said EAC was also learning from other regional blocs like the eurozone on intricacies of the monetary union, before ratifying the agreement.

The two-day conference comes amid a growing regional trade crisis. Most of the region’s border posts are experiencing cargo backlogs, amid graft allegations.

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