Business News of 2014-04-28

Common currency agenda may elude us - Veep

The Vice-President, Mr Kwesi Bekoe Amissah-Arthur, has stated that West African countries risk missing out on the proposed common currency policy by 2015 if all the macroeconomic convergence criteria are not met.

He added that attaining the goal of a common monetary policy would continue to remain an illusion until the harmonisation of all fiscal, financial and monetary policies was complete ahead of the scheduled date.

Mr Amissah-Arthur expressed these concerns when he opened the first conference of Rotary International District 9102 in Accra yesterday.

He remarked, “It is better to get all the macroeconomic indices right before converging than rushing into an unsustainable monetary integration that has the potential to deepen the macroeconomic woes of member states.”

The new District 9102, which was carved out of 14-country District 9100, comprises Ghana, Togo, Benin and Niger.

The Vice President’s address centred on the challenges of the Euro zone and their implications for the West African Monetary Union (WAMU).

Challenges

Mr Amissah-Arthur observed that WAMU was a challenge, given the imbalances in individual national economic strengths, adding that Nigeria alone, prior to re-basing its Gross Domestic Product (GDP) this month, constituted two-thirds of the GDP of the other countries.

On that score, he indicated that it was important for countries to prepare to give up a degree of their sovereignty and converge politically to avoid potential problems, pointing out that monetary integration was not just an economic matter but also political.

“It is political, in the sense that it involves fiscal discipline, trade policies, investment decisions and even security considerations,” the Vice-President added.

Failures

The target date for the West African Monetary Zone (WAMZ) has been postponed three times — from January 2003 to December 2005 then to December 2009 and now to January 2015.

These failures Mr Amissah-Arthur attributed to the pace of the implementation of the ECOWAS Monetary Co-operation Programme (EMCP), particularly the establishment of the single monetary zone, which he observed failed to match expectations.

He also alluded to a major obstacle in the area of poor policy co-ordination and the harmonisation between the Anglophone and the Francophone West African countries which belonged to the West African Economic and Monetary Union (UEMOA).

Euro Zone implications

Touching on the challenges of the Euro zone and their implications, the Vice President said the Euro zone crisis had “huge” implications for West Africa, since the envisaged closer economic integration in the sub-region was seen as an important strategy to expand markets among member states.

The common currency, the Eco, he stated, would enhance intra-regional trade by eliminating exchange rate volatility, reducing transaction cost and facilitating capital flows within the sub-region.