Veep cautions against rush in implementing Eco

Vice President Kwesi Amissah-Arthur says the introduction of the ECO and launch of West African Monetary Zone (WAMZ) on January 2015 will only be feasible if all the macroeconomic convergence criteria are met.

He said the process must also include the completion of the harmonisation of all fiscal, financial and monetary policies.


He explained that it is better to get all the macro-economic indices right before convergence, rather than rushing into an unsustainable monetary integration that has the potential of deepening the macroeconomic woes of the Member States of the Economic Community of West African States (ECOWAS).


“The ideal integration situation is where countries in the union share common monetary authority or central bank,” the Vice President said; adding “otherwise, trying to operate a single currency without social economic and political integration is likely to face challenges greater than those experienced by the Euro Zone”.


Vice President Amissah-Arthur threw the caution in an address at the first District Assembly and Conference for Rotary International District 9102, in Accra.


The District 9102 comprises Ghana, Togo, Benin and Niger, and was created out of an original group of 14 countries in West Africa that had grown very big.


Vice President Amissah-Arthur recalled that the establishment of the West African Common Currency, the ECO was delayed from January 2003 to December 2005, then to December 2009 and now January 2015.

He said it is important for countries to prepare to give up a degree of sovereignty and to converge politically to avoid potential problems.


“Monetary is not just a matter of economics. It is political in the sense that it involves fiscal discipline, trade policies, investment decisions and even security considerations,” he said.


With reference to the creation of the Euro, Vice President Amissah-Arthur, a former Governor of the Bank of Ghana, and former Deputy Minister of Finance, observed that the ideal situation is where countries share common monetary and fiscal policies, a common pool of foreign exchange reserves, and a common currency authority or central bank.


He said the Euro Zone crisis has huge implications for the WAMZ, since the envisaged closer economic integration in the sub-region is seen as an important strategy to expand markets and the trade of goods between member states.


“The common currency, the ECO, when introduced, will undoubtedly enhance intra-regional trade by eliminating exchange rate volatility, reducing transaction costs and facilitating capital flows within the sub-region.”


He said a number of policy gaps in the formation of the Euro created a situation of instability as the design of the Euro Zone did not anticipate having to deal with sovereign debt crisis and the consequent absence of a contingency plan or safety, the need for a lot of co-ordination to arrive at decisions, and absence of compelling mechanisms to enforce the commitments of member states.

The Vice President pointed out that fiscal and monetary policies are not enough to ensure sustainability against weak co-ordination of economic policies; hence the formation of the West African Monetary Union is a challenge, given the imbalances in individual national economic strengths of the WAMZ countries.


Nigeria alone, Vice President Amissah-Arthur said, prior to rebasing its Gross Domestic Product (GDP), constituted two-thirds of the total GDP of WAMZ.


The Vice President commended the Rotary Club for partnering Government to improve the welfare of the people, especially those living in deprived communities through water and sanitation, literacy and health related projects and especially the polio eradication campaign.


“Through your efforts and collaboration with stakeholders, Ghana was declared polio-free in 2013,” Vice President Amissah-Arthur said.