East African Business Week (Kampala)
By Kenan Kalagho, 29 October 2012
Dar es Salaam, Tanzania — With prospects of South Sudan joining the East African Community later this year, making it the sixth country to join the bloc after Burundi and Rwanda, the EAC member states have been asked to harmonize Monetary Union policies if they are to have the common currency as the bloc moves towards attaining a political federation.
Presenting a paper on 'Euro Crisis and lessons for EAC', in Dar es Salaam, Tanzania Minister for East African Cooperation Mr. Samuel Sitta said the East African regional bloc is undertaking different negotiations within the member states which will lead into the signing of the Monetary Union protocol.
Sitta said as the bloc moves into the Monetary Union, there is need for the regional bloc to fully implement and adhere strictly into the signed Monetary Union protocols like the trend of government borrowing in order to create a conducive environment.
"The East African Community is going to have a criterion for fixing the limits of restricting budget deficit borrowing if the region is to remain with a strong currency; Sitta said adding that "the system of borrowing had affected much the European Union where countries borrowing under the mortgage scheme had inflated the value of buildings."
He said full implementation of the Customs Union and Common Market signed area by the member states were necessary condition for attaining the real economic convergence in the region and qualify as an optimum currency area capable of establishing a sound and robust monetary union.
Sitta however noted, while with EU experience, the road towards Monitory Union was challenging, the attainment of agreed nominal convergence criteria in the region without underlying real economic convergence was not sufficient for the creation of a sound and sustainable monitory union.
He pointed out while imposing enforcement of financial sanctions against sovereign state in the member states will prove to be a difficult task, the adherence to the fiscal rules by the member states will depend much on the willingness of the states and their national development challenges.
The EAC minister also said the real economic convergence will lead to homogeneity in national policies among partner states and thus cushion against conflict between national and regional economic policies which could hamper the well functioning of the Monitory Union and that the introduction of surveillance mechanism was an important tool in regulating the macroeconomic imbalances.
"One market means that we (in the East African region ) will be proclaiming for one investment which will require one currency, Sitta said, adding that however difficult the Monitory Union might be, it will be good for the region and improve the region's economic development"
On his part the Kenyan Ambassador to Tanzania Mr. Mutinda Mutiso said the foundation of integration was to trade and exchange the value of goods in that creates an environment into doing the business in a bigger way.
He said there was need for the EAC to learn from the experiences of the EU and the Euro Zone crisis because the bloc was one of the partners' in businesses where goods from the EAC regional bloc were being exported.
No comments:
Post a Comment