This archive report was first published on 10 August 2019.
As the East African Community (EAC) member states approach the 2024 deadline for implementing a single currency regime, they are facing significant challenges in meeting the required macroeconomic benchmarks. According to Bank of Uganda Governor Emmanuel Tumusiime-Mutebile, several challenges stand in the way of fully implementing the East African Monetary Union Protocol.
Speaking at the 23rd Ordinary Meeting of the EAC Monetary Affairs Committee in Kigali last month, Mr. Tumusiime-Mutebile emphasized the importance of reassessing the practicability of the current timelines. The Protocol for the establishment of the EAMU was signed in November 2013, setting up a 10-year roadmap for attaining a single currency regime.
Under the Protocol, EAC member countries are required to comply with key macroeconomic convergence criteria, including inflation, fiscal deficits, forex reserves, and public debt. These criteria must be met for at least three years before joining the bloc's planned single currency. The EAC countries are expected to attain headline inflation of a maximum of eight per cent, a fiscal deficit, including grants, of not more than three per cent of GDP, public debt-to-GDP ratio of 50 per cent, and forex reserves of at least 4.5 months of import cover.
EAC Director of Monetary and Fiscal Affairs Pantaleo Joseph Kessy noted that compliance has been slower than expected. The EAC member states are now set to start discussions on revising the timelines for the start of the single currency regime, with only five years remaining until the 2024 deadline.
