The Deputy Minister for East African Cooperation Abdulla Saadalla said that Tanzania’s ratification of the EAC Monetary Union Protocol demonstrates that the country is not a stumbling block to regional integration.
The next step is to dispatch the instrument of ratification to the EAC Secretary General by the Clerk of Tanzanian National Assembly as required by the Treaty for establishment of East African Community.
“The union will eliminate the costs attendant to juggling different currencies thereby reducing transaction costs and minimising inflation in the region, thus creating an economically stabilized region with a conducive environment for Direct Foreign Investment and therefore uplifting the economic standard of its people,” he said.
The protocol establishing the East African Monetary Union was signed by the EAC Heads of State on 30 November 2013, in Kampala, Uganda during their 15th Ordinary Summit and for a wide scope of co-operation in the monetary and financial sectors among the Partner States.
The East African Monetary Union is the third stage of EAC integration and will ultimately lead the five-member bloc to adopt a single currency regime by 2024.
The protocol provides for a wide scope of co-operation in the monetary and financial sectors among the Partner States.
Under the protocol, the EAC partner States are expected to surrender monetary and exchange rates policies to the East African Central Bank leading to a single currency regime within the region, whereas National Central Banks will remain with the mandate of managing fiscal policy, fiscal discipline and harmonise them with the other Partner States’ National Central Banks.
The protocol will be implemented over a 10 year period, subsequently leading to creation of regional financial institutions whose mandate will be to stabilise financial prices as well as monitoring, surveillance, statistics and enforcing compliance of all other macro finance matters, including buffering of any emerging economic shocks.