The West African Monetary Institute (Wami) says the planned convergence of a single currency by member countries of the West African Monetary Zone (WAMZ) is well on course.
“Following the landmark decisions in Bamako, Mali, in December 2000, establishing the Wami, notable developments in the WAMZ programme have taken place,” MO Ojo, director general, Wami says.
Ojo says among the frameworks already prepared by the Wami are a monetary policy framework for the West African Central Bank (WACB), an external reserve management system of the WACB as well as a system of banking supervision in the WAMZ and operationalisation of the Stabilisation Cooperation Fund (SCF) of the WAMZ.
He adds: “The institute also designed an exchange rate mechanism for the WAMZ, which has been operationalised since April 2002.”
But while considerable progress has been made in the preparation of the policy frameworks and structural designs for the monetary zone, Ojo says developments in the economic performance of member states have not been very satisfactory.
As at the end of June 2002, he claims, only one country (
“Fiscal imbalances, especially fiscal deficits were identified as the primary causes of macroeconomic instability,” Ojo hints.
The avoidance of fiscal dominance, he goes on, was considered necessary for the realisation of the stipulated macroeconomic convergence criteria.
The WAMZ programme was a brainchild of the collective effort by the member countries made up of Gambia, Guinea, Ghana, Nigeria and Sierra Leone, to establish a second monetary zone to facilitate the integration of their economies and make it easier for the actualisation of the Ecowas Monetary Cooperation programme intended to usher in a single currency for the whole of Ecowas.
To achieve this, four primary and six secondary convergence criteria were prescribed for the eligibility for the monetary union. Among them was the reduction of inflation below 5% by member countries.
The common currency was to be introduced this year but has now been extended to
Asked whether it was possible to relax the convergence criteria to enable member countries meet the extension deadline, he says, “We will not relax the criteria, stability means stability.”
Meanwhile, during the two and a half year extension period, Wami will among others draw up a specific convergence programmes for implementation for member countries.
Incorporate convergence criteria in the annual budgets and economic programmes of member countries and design the currency management framework of the WAMZ.
According to Ojo, the monetary union (the ECO) will commence on
He adds that the physical currency will not be printed until the WACB is firmly on ground to cope with the associated technical problems.