The East African Community’s pursuit of a single currency continues today as negotiations for the East African Monetary Union (EAMU) Protocol enter the eighth round.
The latest round of talks is scheduled to start today, and is expected to end on July 28, this year here, according to EAC statement released yesterday.
“The Monetary Union is the third phase of the EAC integration process and its attainment will see the region adopt a single currency,” the statement read in part
The negotiating team known as the High Level Task Force (HLTF) will, over the six-day period, discuss outstanding matters in Articles 1-59 of the draft EAMU Protocol and negotiate draft Articles 60-72.
The draft Protocol contains 86 Articles in total.
The HLTF comprises senior officials from the Partner States’ Ministries of Finance, Planning and Economic Development, East African Community Affairs, as well as central banks, capital markets authorities, insurance and pensions regulatory agencies, and national statistics offices.
The draft provisions the HLTF will cover three broad areas, namely- financial arrangements, integrated financial management systems, and transitional arrangements.
Specifically, articles to be debated include those legislating the funding and operations of the proposed East African Central Bank, harmonisation of accounting and reporting standards, establishment of the proposed East African Monetary Institute, as well as the schedule and timetable for establishment of the Monetary Union.
Previous rounds of negotiations deliberated on provisions touching on, among others, the scope of the monetary union; macroeconomic policy framework; monetary policy framework, exchange rate policy and exchange rate mechanism, and instruments of monetary control.
The negotiations commenced in January 2011 and are targeted to be concluded this year.
The process for the establishment of the East African Monetary Union is underpinned by Articles 5 and 82 of the EAC Treaty where, among others, the Partner States 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 EAMU will deepen the integration of East African economies and, in doing so, enhance the benefits which can be derived from the EAC Common Market.
To enrich the negotiations, the EAC commissioned various studies, which included among others a study on the review of the EAC macroeconomic convergence criteria; and one on a harmonized monetary policy framework for the region, both done jointly by the EAC and the International Monetary Fund (IMF).
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.