Ghana: Concerted Effort Needed to Build a Viable Monetary Union - Dr Addison

8 September 2023

A concerted effort is required to help improve the region's macroeconomic environment and place it on a stronger convergence path for a viable monetary union, Governor of the Bank of Ghana (BoG), Dr Ernest Addison, has stated.

That, he said, would help facilitate the move by Economic Community of West African States (ECOWAS) for a single currency by 2027.

According to him, the assessment of the regional economies for 2022 showed that no member state satisfied the four primary convergence criteria, and same cannot be achieved in 2023.

The convergence criteria include a single-digit inflation, a fiscal deficit of not more than four per cent of Gross Domestic Product, and central bank deficit financing of not more than 10 per cent of previous year's tax revenue.

ECOWAS initiated a move two decades ago for a single currency as pertained in Europe and the Authority of the ECOWAS Heads of State and government adopted a new roadmap for the launch of the ECO and a new Macroeconomic Convergence and Stability Pact, which should be met by member states by December 31, 2026.

COVID-19 pandemic disrupted the plan to launch the ECO in 2020.

Dr Addison made the call at the 43rd Ordinary Meeting of the Economic and Monetary Affairs Committee and the Operations and Administration Committee of the West African Monetary Agency.

The meeting, being convened by the Government of Ghana under the auspices of the Ministry of Finance and the Bank of Ghana, in collaboration with West African Monetary Agency (WAMA), the West African Africa Institute for Financial and Economic Management (WAIFEM), and the West African Monetary Institute (WAMI), formed part of the West African Monetary Zone meeting currently underway in Accra to review macroeconomic developments in the region.

Dr Addison, in a keynote address read on his behalf by the Director of Research of BoG, Dr Philip Abradu-Otoo, said the concern now was whether the 2026 deadline for achieving the convergence was still realistic in the face of the disruptive effects of the repeated shocks on the region.

"This, perhaps, calls for a readiness assessment for the launch of the ECO in 2027 as we move along," he stated.

The Governor said in spite of the challenges, notable progress had been made in the roadmap for the implementation of the single currency objective, adding that "A lot more remained to be done".

"While we strive to fulfil the arduous task of meeting the convergence criteria, we need to pay equal attention to other key areas of the roadmap," Dr Addison stated.

He stressed the need for the unification of the payment and settlement systems and harmonisation of statistics in the region.

Dr Addison said the meeting would involve critical discussions across various sectors of the region's economies and the implementation of roadmap of the single currency for the region.

The Governor of BoG entreated the delegates to participate actively and help broaden the policy discourse towards a viable monetary union.

The Director-General of WAMA, Momodou Bamba Saho, said there was the need for enhanced strategies and reforms to ensure all the member states of ECOWAS met the ECO Convergence Criteria.

"It is incumbent that our work here not only remains pertinent and useful to member states, but also serves as bedrock of stability and cohesion in these very complex times," he stated.

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