Parliament has passed a motion approving the establishment of the East African Monetary Union which will see Uganda, Kenya, Tanzania, Rwanda and Burundi adopt a single or common currency.
The Monetary Union is intended to “promote and maintain monetary and financial stability aimed at facilitating economic integration to attain sustainable growth and development of the Community.”
The EAC Summit shall pronounce the formation and commencement of the single currency area and will determine the name of the currency, which shall be the legal tender of the area.
According to provisions of the Protocol for the Establishment of the East African Monetary Union (EAMU), Partner States agree to harmonise and coordinate their fiscal policies; formulate and implement a single monetary policy and a single exchange rate policy, and to develop and integrate financial, payment and settlement systems.
In addition, the states will integrate their financial management systems; and harmonise their financial accounting and reporting practices.
The Monetary Union is the third stage, following the Customs Union and the Common Market, towards the full realization of a Political Federation for the five countries in the Region.
According to the Treaty for the Establishment of the East African Community, the five Partner States undertake to conclude Protocols as may be necessary in each area of cooperation, providing the objectives, scope of and institutional mechanisms for cooperation and integration. Partner States also agreed, according to the Treaty, to cooperate in monetary and financial matters.
The Minister of State for Finance (Planning), Hon. Matia Kasaija (NRM, Buyanja) said that the Monetary Union together with other stages of the Community would contribute to the achievement of harmonious, balanced and sustainable economic development; sustainable and non-inflationary economic growth; intra-regional economic and financial system; and efficient allocation of resources for economic development.