FINANCIAL MARKET INSTABILITY PROMPTS ADDED TALKS ON CURRENCY UNION
Recent wild swings in the values of the three core currencies and record devaluations within the East African Community, the Kenya Tanzania Uganda Shillings, has resulted in Central Bank chiefs, apparently with the blessing of their political masters, to advance the schedule of talks towards a common currency for the EAC member states.
A high level task force will meet at the Imperial Resort Beach in Entebbe for a record 10 days to negotiate a time frame and broader policy and operational framework for the introduction of a common Shilling, focusing on the required harmonization of financial policies, tax and duty alignments, budget processes, debt management and limitations and other key areas which when NOT harmonized can impact severely on the national economies coming under a uniform currency umbrella. The 10 day talks will bring together the Central Bank chiefs and key experts from the member states and will also be dealing with recommendations for immediate remedial action to stem the slide of the local currencies and how to deal with inflationary pressures vis a vis interest rates and liquidity management.
In a further sign of how this process is being fast tracked conversion rates from national currencies into a common Shilling will be on the agenda too, including drafting of re-domination announcements to be published when the time comes.
This latest round of negotiations is complementing other protocols already in place like the customs union and the common market. The forthcoming head of state summit will undoubtedly spend time on this crucial issues but has already set a 2012 deadline to lay the foundations for a common currency.
The process is reportedly being supported by the IMF and both bilateral and multilateral development partners with technical assistance and other related inputs.
East Africa slowly becoming reality even if some have to be dragged into it screaming and kicking for the good of the regions future. Watch this space.