EAC single currency talks ‘near completion’

Experts on the monetary union are optimistic that by end of this year, all technical negotiations to establish a single currency for the East African Community (EAC) will be complete, Dr Frank Kigabo, the Rwandan chief negotiator, has said.Kigabo, who is also the Chief Economist at the National Bank of Rwanda, is among negotiators currently in Arusha Tanzania to discuss the remaining articles in the protocol and studies by International Growth Centre (IGC). The primary rationale for a monetary union is to reduce the costs and risks of transacting business across national boundaries of regional member states.“We hope by end of November this year all the negotiations by the High Level Task Force (HTLF) will be complete,” he said.HLTF is 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.Kigabo said, currently, they are perusing through the study done by the International Growth Centre (IGC) on the exchange rate mechanism. He also said International Monetary Fund (IMF) studies on monetary policy and macro-economic convergence will also be discussed before the negotiations ends.Kigabo added that IMF had requested for the EAC inputs before the studies are completed and that they were submitted and are now waiting for the release of the study for member states to decide.Dr Kigabo, pointed out that negotiators had acquired ample experience and lessons from other blocs using the single currency hence the enthusiasm that the currency would at last be attained.Recently, all chief negotiators of the monetary union from all EAC partner states visited the European Union to learn how the Euro works, a move that would help them in setting up the single currency. After the implementation of the Customs Union and the Common Market, the Monetary Union is the next and third stage in the integration process of the EAC. The ultimate step will be the formation of a political federation.Dr Enock Bukuku the EAC deputy Secretary General in charge of planning and infrastructure while speaking at the opening of the meeting, advised the negotiators to speed up the process for the benefit of the community.“I urge all Partner State delegates in the course of these negotiations, to do their utmost to build consensus quickly,” he said.Rifts emerged on the issue of single currency at the IMF-EAC conference in Arusha February this year as the International experts were advising the member countries to slowdown on the negotiations of single currency saying it was prudent to embark on promoting infrastructure.“It’s not the right time for EAC to have a single currency. You need a lot of time; it’s not good to rush. There is a need to learn more, especially what would be the incentives among the partner states and the penalties for discipline to those who will not fulfil their obligations,” said Prof. Paul Collier, an Economist at Oxford University, in an exclusive interview with The New Times at the time.He said the region must first focus on instituting strict rules and regulations to avoid financial crises that might hit the region in future.“Europe is suffering today because of breaking the fiscal deficit and balance of payment laws; an issue that the East African Community should avoid. It took Europe 44 year to negotiate and have a monetary Union and EAC wants to do it within a few days, it’s wrong, they will regret it,” he said.