EAC monetary union negotiating team embarks on study tour of European Union
ARUSHA, Tanzania, January 11, 2012/African Press Organization (APO)/ — A 20-member delegation from the East African Community, will, Friday 13 January 2012 depart for Brussels, Luxembourg, Frankfurt and Berlin on a 12-day study tour of the European Union (EU) aimed at enhancing the region’s understanding of the EU’s economic and monetary union, including the relevant institutions necessary for a successful monetary union.
The group, comprised of three members/chief negotiators of the High Level Task Force (HLTF) negotiating the EAC Monetary Union Protocol from each Partner State and five officials from the EAC Secretariat led by the Deputy Secretary General in charge of Planning and Infrastructure, Dr. Enos Bukuku, will share experiences and interact with officials from EU and EU Member States’ institutions who have an active role in the EU’s economic and monetary union affairs.
During the tour they will study the formulation and conduct of monetary union policy in the Eurozone; the interaction between fiscal and monetary policies; design of macroeconomic convergence criteria; and understand the surveillance and compliance mechanism with regard to macroeconomic convergence.
The study tour will help the group to better understand the prerequisites for a monetary union; conversion rates and currency changeover; the transitional arrangements to a monetary union; and finally discuss the current euro crisis and lessons to be learnt.
The tour, which is organized by GIZ under the EAC-GIZ programme support to the East African Community integration process, will take the delegates to several institutions that include the EU Commission (Brussels), European Central Bank (Frankfurt), German Federal Bank (Frankfurt), Federal Ministry of Finance (Berlin), Federal Ministry of Economics and Technology (Berlin), Eurostat (Luxembourg), European Investment Bank (Luxembourg), European Development Fund (Brussels), and the EU Council of Ministers (Brussels).
The study tour comes at a time when the EAC Monetary Union talks are in high gear, with the High Level Task Force having negotiated 49 Articles–more than half the number of Articles in the draft Monetary Union Protocol–after the six rounds of talks held between January and December 2011.
Negotiated so far are Articles on the scope of the Monetary Union; macroeconomic policy framework; monetary policy framework, exchange rate policy and exchange rate mechanism; and instruments of monetary control.
Also negotiated are Articles on 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.
The negotiating team has also discussed 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; and determination of conversion rates, among others.
Furthermore, various studies the EAC commissioned with the aim of enriching the negotiations are at various stages. These include, among others, a study on the review of the EAC macroeconomic convergence criteria; and another on a harmonized monetary policy framework for the region (both jointly done by the EAC and the International Monetary Fund (IMF)). Another study on a common exchange rate mechanism has been undertaken jointly with the International Growth Centre (IGC).
The next round of negotiations is scheduled for Arusha, Tanzania next month (February). The EAC Summit of Heads of State has set a 2012 deadline for the conclusion of the Monetary Union Protocol.
East African Community (EAC)