East African nations to work toward monetary union
Central bank governors from the East African Community (EAC) member states of
Kenya, Uganda and Tanzania have agreed to work toward a common monetary
The monetary union, one of the preconditions of arriving at a
political federation, will see the three partner states adopt a common
Tanzania's Daudi Ballali, Kenya's Andrew Mullei and Emmanuel
Tumusiime-Mutebile of Uganda also reaffirmed their commitment to support
sustainable development in the region, according to a statement from the EAC
Secretariat issued in Nairobi Saturday.
"The governors reaffirmed their
commitment to support sustainable development in the region and maintain prudent
monetary policies and a sound and stable financial system," the EAC said.
governors who were meeting to discuss progress being made toward implementation
of decisions of the Monetary Affairs Committee of the EAC, agreed to work
together in the design and implementation of government policies directed toward
achieving and sustaining macroeconomic convergence targets in the region and
monetary union in particular.
"They deliberated on interest rates, savings,
and instruments and institutions of monetary policy, as well as the need to
ensure sustainable fiscal deficits," the statement said.
The three governors
observed that in spite of unfavorable weather conditions and high world oil
prices, the three nations achieved higher gross domestic product (GDP) growth
rates last year.
"The governors were satisfied that annual underling
inflation in the three EAC countries remained within the 5 percent ceiling
convergence criteria, despite inflationary pressures during 2004 mainly arising
from drought and rising oil prices in the world market," it said.
emphasized the need to continue with sectoral, structural and institutions
reforms in order to reduce interest rates spreads, and to move toward greater