13 January 2013

East Africa: Regional Currency Only Possible in a Decade - Expert

Kampala — The actualization of the East African Monetary Union that will include having a common East African Currency can only be possible in 10 years after the protocol has been signed, a financial expert has said.

Dr. Adam Mugume, the Director of Research at the Bank of Uganda explains the Monetary Union protocol that the technical team from the Central Banks of the region submitted to the council of ministers proposes that it will take the region a period of at least 10 years before a single currency can be used.

"The proposal we submitted is such that if the protocol was signed this year (2012), it will take us about 10 years to have everything else worked out to have a single currency.

"You have to harmonize several markers for example the parameters we use for measuring inflation in Uganda should be the same in the other partner states," Mugume notes.

He added, "The activities to harmonize these pointers take a lot of time... government debt should also be known, in some cases government debt can be hidden like in the case of Greece. "So you have to harmonize all these activities before the Monetary Union and that is the basis of the 10 years."

He added that the process will also include putting in place a regional central bank that will coordinate the activities of commercial banks in the region.

Mugume however said that the heads of state can decide to cut down all the activities to just two years and quicken the actualization of the single currency.

"That is up to them (Heads of State) but from the technical side that was what we had proposed, whether it will be accepted or not is another story, "Mugume stresses.

The signing of the monetary Union Protocol was due for December 2012 but was pushed to November 2013.

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