Rwanda is waiting for advice from her negotiating committee on whether the country is ready for the East African Community (EAC) monetary union expected to take shape next year, according to Finance Minister, John Rwangombwa.
The Monetary Union seeks to create a single regional currency among partner states but requires the harmonisation of macroeconomic and financial statistics; financial systems as well legal and regulatory framework of the financial sector; and the macroeconomic policy framework of the member states.
“We have hired consultants to undertake the study for now and they will tell us what we need to do; but this might take some time,” Rwangombwa said, when asked about Rwanda’s position on the matter.
He added that negotiations are ongoing, where the committee would technically look into the impact of the negotiations, which involves macroeconomic convergence.
“The committee will tell us whether we are ready for the Monetary Union. This is not something to comment on now.”
The negotiations are on tenterhooks because of the divergence in the monetary policy and macro economic factors with the member States. Uganda is struggling to reduce its inflation while Tanzania still faces the challenge of stabilising her economy after it witnessed high inflation and dry seasons that struck its agriculture sector.
Kenya is no exceptional with high fuel pumps prices, increasing foreign debt leading to stagnant economy while Burundi still lags behind among the member states.
Rwanda’s economy has recorded stable growth with favourable macroeconomic indicators compared to other EAC member States, which which implies that it has to be conscious to maintain its economic stability in the monetary union.
Monique Mukaruriza, the Minister of East African Community affairs said that the implementation and practical application of the Monetary Union would depend on how member states are set to kickoff after negotiations.
She however said that critical issues must be looked at before the implementation of the Monetary Union in order to cushion the EAC economy from economic shocks.
“In order to implement the monetary union you need to make sure you don’t interfere with the economy of any member states.”
She says that the region urgently the Monetary Union to smooth run the common market.
The monetary Union is scheduled to be implemented next year and negotiations have started.