EA monetary union gathers impetus

January 21, 2011
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, ARUSHA, Tanzania, Jan 21- The team of technical experts that is steering the process to further deepen the integration of East African Community’s economies has agreed on a calendar of events that will pave the way for the commencement of negotiations on the protocol establishing the region’s Monetary Union.

This protocol provides for the Statute of the East African Monetary Institute and the East African Central Bank which will carry out the preparatory work that will guide the region towards formation of an East African Monetary Union and its supporting institutions.

“During its five-day preparatory meeting in Arusha, the High Level Task Force created four Technical Working Groups; specialised teams tasked with identifying and advising on all policy, technical and operational issues related to all aspects of the EAMU Protocol,” a statement from the meeting said.

The experts, constituted as a Task Force will negotiate the protocol beginning March this year in Bujumbura, Burundi.

The team – which was given an 18 month time frame by the EAC Council of Ministers within which to conclude a draft protocol – will be required to report on Macro Economic Policy, Statistics, Financial Sector Policy and Payment and Settlements Systems.

The Macro Economic Policy Working Group will handle fiscal, monetary and exchange rate policy while the Statistics Working Group will be charged with designing the conceptual and statistical framework as well as compliance and enforcement of macroeconomic convergence criteria.

“Financial Sector Policy Working Group will handle financial markets, capital markets, insurance, pensions, bank regulation and supervision issues while payment and settlements systems will deal with all payment and settlement systems issues,” said the taskforce.

The team comprises senior officials from the Partner States Ministries of Finance, Planning and Economic Development, and East African Community Affairs, Central Banks, Capital Markets Authorities, Insurance and Pensions Regulatory Agencies, and National Statistics Offices.

The work of these teams will inform amendments to the model protocol in the course of the negotiations.

However, the Task Force deferred conclusion of the roadmap towards the Monetary Union, which will give the region a single currency and instead opted to develop it in the course of the negotiations.

The proposed East African Monetary Union which is the third pillar of the region\’s integration agenda is expected to help reduce price instability and exchange rate volatility.

This will in turn provide the foundation for a competitive business environment that spurs investment and economic growth in 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 East African Community Common Market,” the region’s Heads of State declared at their Summit in 2007, where they also decided to fast track the achievement of the Monetary Union by 2012.

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