Regional experts have called for the need for EAC partner states to cede some sovereign powers to pave way for the introduction of a single currency in the five-nation bloc.
The call was made during the fifth round of the EAC Monetary Union negotiations, which got underway in Entebbe yesterday.
Dr Thomas Kigabo, a chief economist at the National Bank of Rwanda, is heading the High Level Task Force (HLTF) delegation from Rwanda at the week-long meeting.
“Given the experience of the Euro zone, you will realise the need for integration of partner states’ fiscal policies to support the monetary policy, which will require partner states relinquishing their sovereignty,” Edith Mwanje, the Permanent Secretary of Uganda’s Ministry of EAC, affairs said in her opening remarks.
Articles to be negotiated at the meeting include; harmonisation and coordination of fiscal policies, taxation and customs, and national budget formulation processes.
Others are; domestic and external debt management frameworks; joint financing of projects; and macroeconomic convergence.
Kigabo told The New Times that he was upbeat that the single currency will facilitate trade in terms of reduced transaction costs, and price transparency and predictability of investment and consumption decisions.
“We are looking at having a situation where a resident from Musanze District (Northern Province) can cross over to Kampala and buy goods without having to change currency,” Kigabo said.
The experts will also discuss a framework for building resilience and managing economic shocks as well as safeguard measures; the conditions for the application of such measures plus surveillance and compliance mechanisms to be embedded in the Protocol.
The EAC Deputy Secretary General (Planning and Infrastructure), Dr. Enos Bukuku, said that two studies on exchange rate mechanism and harmonised monetary policy frameworks are being fast tracked.
“In addition, the study on macro economic convergence that is being undertaken in collaboration with IMF is also on track and should be completed by December 2011,” he added.