Central bank governors from the East African Community (EAC) member states of Kenya, Uganda and Tanzania have agreed to work toward a common monetary union.
The monetary union, one of the preconditions of arriving at a political federation, will see the three partner states adopt a common currency.
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.
The 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.
They also emphasized the need to continue with sectoral, structural and institutions reforms in order to reduce interest rates spreads, and to move toward greater macroeconomic convergence.