EAC, IMF unveil local rules for Monetary Union
Feb. 11, 2020
The East African Community has rolled out home-grown guidelines for government finance and public sector data statistics as the bloc sets the foundation for a Monetary Union. The guidelines were developed in collaboration with the International Monetary Fund.
EAC deputy Secretary General in charge of Planning and Infrastructure Steven Mlote officiated the roll out in Arusha on Monday.
He said the guidelines will help in compiling quality and comparable statistics at both the regional and international level.
The Monetary Union calls for a strong fiscal co-ordination and converged macro-economic base, and thus the guidelines require partner states to maintain fiscal deficit, including grants at below three per cent of GDP, tax revenues at 25 per cent of GDP and public debt in net present value at below 50 per cent of GDP.
“It’s prudent that these indicators are compiled using common methodology and similar practices if we’re to maintain a sound Monetary Union,” said Mr Mlote.
The guidelines will be applied in Kenya, Rwanda, Tanzania and Uganda and South Sudan. Burundi is still tied to a similar system for French speaking countries.
This is the second time the EAC partner states have developed guidelines with technical support from the IMF wing dubbed East Africa Regional Technical Assistance Centre.
The first phase guidelines of 2014 outlined public sectorisation and social insurance schemes, and classifying revenue and treatment of grants.
“There has been a tremendous improvement in the quality of fiscal data among the EAC partner states, especially on expanding coverage from budgetary central government to general government and finally to the public sector, including state-owned enterprises,” said Mr Mlote, adding that the guidelines are based on those by the European Union for the euro system of national and regional accounts.
“Of utmost importance at this stage is for the partner states to develop and agree on sets of tools that will facilitate monitoring implementation of the guidelines to ensure full compliance,” Mr Mlote said.
However, Rainer Koehler, the IMF GFS division chief, division of statistics department, cautioned that the implementation of the guidelines was often more complex, complicated and challenging than just developing the standards.
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