Vision for single East African currency getting closer
The search for a single East African currency is set to go a notch higher as the regional parliament prepares laws for setting up key institutions.
The East African Legislative Assembly (Eala) has said its committees are using the three-week Dodoma sittings, which began on April 9 to collect views on the East Africa Monetary Institute (EAMI) Bill, 2017 and the Statistics Bureau Bill, 2017, which had earlier sailed through the first and second readings.
The Monetary Institute Bill seeks to set up EAMI as an agency to initially perform the role of a regional central bank. It will be expected to craft policies required to back a single currency.
The EA Statistics Bureau Bill will on the other hand create a regional agency akin to European Union’s Eurostat, charged with gathering data to guide decision making within the EAC Monetary Union.
The Eala’s Committee on Communications and Trade is currently engaging with stakeholders on the regional Statistics Bureau Bill while its General Purpose Committee is handling views on the EAC Monetary Institute Bill.
The East African ministers, including Kenya’s Cabinet Secretary for East African Community and Northern Corridor Development Peter Munya, are among the stakeholders on queue to exchange views with the Eala committees.
“The Council of Ministers for EAC is thus expected to meet with the committees to thrash out key matters on both Bills,” Eala said in a statement.
The two agencies are among the enabling institutions whose absence has delayed the region’s match to a single currency regime.
Others, which must be established to pave the way for a regional currency include East African Financial Services and the East African Surveillance, Compliance and Enforcement Commission.
The East African Monetary Union protocol lays groundwork for a monetary union within 10 years during which the partner States will progressively converge their currencies into a single currency for the bloc.
Kenya, Uganda, Tanzania, Rwanda, Burundi and South Sudan must, however, meet specific targets on public debt, inflation, forex reserves and fiscal deficit by 2021 to pave the way for the single currency.
The States are required to keep their debt-to-GDP ratio at no more than 50 per cent and maintain fiscal deficit at not more than three per cent of the GDP.
They must also keep overall inflation at eight per cent and hold forex reserves of 4.5 months of import cover.