As negotiations on the regional single currency intensifies, the Minister in charge of East African Community affairs, Monique Mukaruliza, has said the country will first study all intricacies involved before joining the single currency zone.
It is understood some partner states were pushing for the fast tracking of a monetary union, something the minister said could be imprudent.
“It will depend on how it benefits us in terms of economic transactions with other regional members, otherwise for us we shall not rush. We need a monetary evaluation mechanism to ensure proper usage and avoid crisis that might arise in the region” she said.
Some of the modalities that need to be discussed and agreed upon before the single currency is actualized include domestic and external debt management frameworks, joint financing of projects, macro-economic convergence, harmonization and coordination of fiscal policies, taxation and customs, as well as national budget formulation processes.
Mukaruliza further however pointed out that it would be a great regional achievement if the monetary union was established because it would spur the East African economy.
Last week, Ugandan Members of Parliament called for a delay in the establishment of single currency until some EAC issues are sorted out. According to Ugandan lawmakers, it was useless to fast track the issue of monetary union when the customs union and common market protocols that were passed still have loopholes.
“Some of the principles in the treaty are confusing. We should not rush the issue of monetary union yet other issues like movement of labour and capital are still questionable,” Betty Ochan, Gulu MP was quoted by newspapers as saying.
The Dean of faculty of Economics and Management at the National University of Rwanda, Prof. Rama B. Rao, advised that if partner states were to effectively achieve and benefit from the monetary union there was need to learn lessons from other economic communities.
“For the East African Community to have a strong single currency, it must take lessons from Europe and see how the Euro works,” he said.
In an interview with The New Times, Godfrey Murenzi, a business man, highlighted that it would be important to the business community if the single currency was established.
“It will be unfair on the business community to delay the establishment of a single currency because we always face the problem of exchanging money before we travel to other countries,” he noted.
The EAC Heads of State had directed that the East African Monetary Union be in place by 2012, but it’s doubtable if it will be achieved. If it’s established, it will be the third protocol to be established after Common Market and Customs Union.