A negotiating team, known as the High Level Task Force (HLTF) on the Monetary Union, will meet in Uganda at the Imperial Resort Beach Hotel from 31 October to 9 November to negotiate various articles of the Protocol.
This will be the fifth round of negotiations by the East African Community on a march towards a single currency.
Dr. Enos Bukuku, EAC’s Deputy Secretary General (Planning and Infrastructure), confirmed that among the draft provisions to be negotiated over a ten-day period are articles on the harmonization and coordination of fiscal policies; taxation and customs; national Budget formulation processes; domestic and external debt management frameworks; joint financing of projects; and macroeconomic convergence.
Experts from the Partner States will also negotiate provisions on coordination of monetary policy and fiscal policies; restrictions on Central Bank lending to public entities; restrictions on privileged access to financial institutions; conditions for bail-outs; conduct of foreign exchange transactions by Partner States; management of foreign exchange reserves as well as liberalization of current account and capital accounts of the Partner States.
Crucially too, the HLTF will discuss a framework for building resilience and managing economic shocks as well as safeguard measures; the conditions for the application of these safeguard measures plus surveillance and compliance mechanisms to be embedded in the Protocol.
The Task Force will also negotiate provisions on the name and status of the single currency envisaged for the EAC, as well as provisions on the determination of conversion rates, conversion and redenomination of existing legal instruments and bank notes and coins to be issued by the proposed East African Central Bank (EACB).
After the Customs Union and the Common Market, the Monetary Union is the third stage in the integration process of the EAC bloc, which ultimately aspires to a Political Federation.
The EAC Summit of Heads of State has set a 2012 deadline for the achievement of the Monetary Union, and EAC Secretary General Amb. Richard Sezibera has on different occasions reiterated EAC’s commitment to have the Monetary Union Protocol concluded within the set timeline.
Dr. Bukuku on his part notes that the Monetary Union will help mitigate price instability and exchange rate volatility in the region, which would be a boon for businesses and ultimately promote investment and spur development.
To enrich the negotiations, the EAC has commissioned various studies, which include among others a study on the review of the EAC macroeconomic convergence criteria; and one on a harmonized monetary policy framework for the region both of which are being done jointly by the EAC and the International Monetary Fund (IMF). Another study on a common exchange rate mechanism is being undertaken jointly with the International Growth Centre (IGC).
Previous rounds of negotiations deliberated on provisions touching on, among others, the scope of the Monetary Union; macroeconomic policy framework; monetary policy framework, exchange rate policy and exchange rate mechanism; and instruments of monetary control.
The negotiations commenced in January this year and are targeted to be concluded by early 2012.
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