, ARUSHA, Jan 18 – Experts from the East African Community (EAC) Partner States on Tuesday embarked on a four-day meeting in Arusha that sets the stage for negotiations for the East African Monetary Union.
EAC Secretary General Juma Mwapachu opened the preparatory meeting of the High Level Task Force (HLTF) that will negotiate the protocol to establish a monetary union by emphasising the importance of the next stage of the integration process to the region\’s economy.
"The introduction of a common currency will provide a stronger and more solid basis for investment and economic growth," Mr Mwapachu remarked. "Certainly, for an efficient and effective common market to operate, a monetary union, not only the simple free movement of capital is essential."
The EAC Secretary General noted that the partner states need to integrate their economies more deeply for the region to achieve the monetary union, the third pillar of the integration agenda after the customs union and common market.
Mr Mwapachu also observed that a monetary union would help eliminate price instability and exchange rate volatility, which he said would translate into a competitive business environment that spurs investment flows and growth.
Negotiations for the protocol are slated to commence in March this year.
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 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 monetary union.
The East African monetary union by granting the region a single currency would remove the costs of having to transact in different currencies and the risk of adverse exchange rate movements for trade within East Africa.
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 20th Meeting of the EAC Council of Ministers held in Arusha, Tanzania from 19-26 March 2010, among others to be discussed will be; adoption of a model comprehensive protocol on East African monetary union that is to be negotiated also, approve the draft terms of reference for the high level task force for negotiating the protocol.
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