Posted by: africanpressorganization | 2 March 2010

Joint meeting of ministers of finance, EAC affairs endorses report on East African Monetary Union / Joint Meeting adopts Roadmap to EAMU / Negotiations of Monetary Union Protocol to start March 2011

 


 

 

Joint meeting of ministers of finance, EAC affairs endorses report on East African Monetary Union / Joint Meeting adopts Roadmap to EAMU / Negotiations of Monetary Union Protocol to start March 2011

 

 

ARUSHA, Tanzania, March 2, 2010/African Press Organization (APO)/ — A joint meeting of the Ministers responsible for Finance, Economic Planning and East African Community Affairs today received and considered the final study report on the establishment of the EAC Monetary Union from the joint meeting of the EAC Monetary Affairs Committee (MAC), Fiscal Affairs Committee (FAC) and Capital Markets, Insurance and Pensions Committee (CMIPC) that was held at the Snowcrest Hotel in Arusha, Tanzania.  The joint Ministerial meeting endorsed the study report together with all its annexes as one of the working documents for the East African Monetary Union (EAMU) negotiations process.

 

The joint meeting was attended by Hon. Mohamed A. Aboud, The United Republic of Tanzania’s Deputy Minister of East African Cooperation; Hon. Syda M. N. Bbumba, Uganda’s Minister of Finance, Planning and Economic Development; Hon. Clotilde Nizigama, Burundi’s Minister of Finance; Hon. Dr. Oburu Oginga, Kenya’s Assistant Minister, Office of the Deputy Prime Minister; Hon. Amason Jeffah Kingi, Kenya’s Minister of the East African Community; and Hon. Monique Mukaruliza, Rwanda’s Minister of EAC Affairs.

 

Others included the EAC Deputy Secretary General in charge of Planning and Infrastructure, Mr. Alloys Mutabingwa; Dr. Benno Ndulu, Governor, Bank of Tanzania; Mr. Chris M. Kassami, Uganda’s Permanent Secretary to the Treasury in Ministry of Finance, Planning & Economic Development; Mr. Gaspard Sindayigaya, Governor Bank of Burundi; Mr.  Francois Kanimba, Governor Bank of Rwanda; Mr. David S. O. Nalo, Kenya’s Permanent Secretary, Ministry of East African Community; Eng. Abdulrazak A. Ali, Permanent Secretary, Ministry of Trade Kenya; Prof. Njuguna Ndun’gu, Governor Central Bank of Kenya, and senior staff from the EAC Secretariat.

 

The adopted study addresses four main issues namely the prerequisites for the East African Monetary Union (EAMU); the legal and institutional framework necessary for the implementation of EAMU, including the model Protocol for the establishment of EAMU; the preparatory work for the transition to EAMU, and lastly; the operational regulatory framework for EAMU.

 

The Ministers noted that all the comments made by the stakeholders at the validation workshop in January 2010 in Kampala, Uganda had been incorporated in the study report. The Ministers commended the ECB consultants and the EAC Secretariat for the comprehensive report and observed that the findings of the study would inform the monetary integration process in the EAC.

 

Road Map to EAMU

 

The Ministers discussed the various processes of achieving the establishment of the EAMU. They noted that there were various issues that required detailed consideration among them; the legal, institutional and regulatory framework; operational issues; and policy direction on options for establishing the East African Central Bank (EACB).

 

The meeting further noted that, Article 151 of the Treaty provides among others that Partner States shall conclude such Protocols as shall be necessary in each area of cooperation, which shall spell out the objectives and scope of cooperation and institutional mechanism for such cooperation and integration.

 

In order to accomplish this task, the meeting noted that there was need to form a small and efficient team comprising senior officials from the key institutions including Ministries responsible for Finance and Economic Planning, Central Banks, Capital Markets Agencies, Pensions and Insurance Regulators, National Statistics Offices, Attorneys General Chambers and Association of Bankers’, coordinated by Ministries responsible for EAC Affairs.

 

In view of the above, the joint session of the Ministers recommended that a comprehensive Protocol on EAMU be negotiated; and that a High Level Task Force (HLTF) be established urgently to negotiate the EAMU Protocol and review the draft roadmap.

The Ministers also took note of the draft Roadmap on EAMU as proposed by the Bank Governors, Permanent Secretaries and CEOs and approved the draft Terms of Reference for the HLTF.

 

The HLTF is to review and refine the draft Roadmap and submit the same for consideration by the Sectoral Council of the Ministers responsible for Finance that is to be convened in May 2010.

 

Highlights of the Roadmap

 

The following are some of the targets spelt out in the draft roadmap:

 

Adoption of the Study report on the establishment of a monetary union among the Partner States of the East African Community by April 2010. 

Establishment of the High Level Task Force  (HLTF) mandated to negotiate necessary legal instruments by April 2010

Establishment of Sectoral Council of Ministers Responsible for Finance by the EAC Council of Ministers by April 2010.

The negotiation of the legal instruments necessary for the establishment of East African Monetary Institute (EAMI) by September, 2010

Establishment of the EAMI (a transitional body to prepare for establishment of the EAMU) by December 2011.

Negotiations of the EAMU Protocol and EACB Act to start in March 2011 and expected to end 12 months from the start date

Review of macroeconomic convergence criteria by July 2011 and the establishment of Exchange Rate Mechanism (ERM) by December 2011.

 

The establishment of mechanism for surveillance and enforcement of convergence criteria (in anticipation of EAMU Protocol) including enforcement of fiscal rules; implementation of relevant articles in the Common Market Protocol in support of EAMU; approximation of laws relevant for the operation of EAMU (inclusive of changeover to single currency); legislation necessary for operationalisation of the EAMU Protocol; and regulatory framework of EACB are targeted to done by December 2011.

 

The roadmap observes that for the EAMU to be realised in 2012, it is critical that preparatory work be fast tracked.  However, given the volume of minimum preparatory work required, a 2012 target may not be feasible.

 

Formation of Sectoral Council of Ministers Responsible for Finance

 

The meeting noted that given that most of the work to be undertaken during the transition to the Monetary Union falls within the Ministries responsible for Finance, there was need to establish a Sectoral Council of Ministers responsible for Finance to spearhead the Monetary Union process. The meeting proposed that the Sectoral Council of Ministers be composed of the following critical ministries; Finance; Economic Planning, and; other co-opted Ministers as may be deemed necessary.

 

The Sectoral Council of Ministers shall be responsible for considering the reports of the Sectoral Coordination Committee on EAMU; approval of the negotiations programme, and; policy guidance on the negotiation process.

 

In view of the above, the joint session of the Ministers recommended to the EAC Council of Ministers that a Sectoral Council of Ministers responsible for Finance be formed to spearhead the Monetary Union process and the Draft Terms of Reference for the Sectoral Council of Ministers responsible for Finance be approved.

 

The meeting also observed that there is need to strengthen the capacity of the Secretariat to facilitate the process of fast-tracking the Monetary Union. In this context, the Joint Session of Ministers recommended to the Council of Ministers that an assessment of the capacity of the EAC Secretariat to backstop the process of establishing EAMU be undertaken; and the report of the capacity assessment of the EAC be presented at the next meeting of the Sectoral Council of Ministers responsible Finance in May 2010.

 

 

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Richard Owora Othieno
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Phone: +256 718 358664 / +255 784 835021
Email: othieno@eachq.org

SOURCE 

East African Community (EAC)


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