Fiscal, Monetary Experts Envisaged Financial Integration

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Flashback: Participants at the WAMA conference

Hosts 31st joint ordinary meeting of Economic and Monetary Affairs committee, operations and Administration committee of WAMA   

Fiscal and monetary policy experts in the West African sub region have begun a nine-day intensive level statutory conference in Monrovia aimed at finding workable solutions to the numerous economic challenges facing the region and focus on financial integration.

The experts are currently discussing wide range of topics including a robust review of the WAMZ program, specifically focusing on the importance of sharing of experiences in a move to ensuring that sound economic decisions are formulated, which they envisaged will contribute immensely in eliminating the shortfalls in their respective economies as well as providing strategies to mitigate such downturns.

Another top priority component expected to be given erudite consideration at the conference is the transition of the West African Monetary Institute (WAMI) into the WAMZ Commission.

The conference, which is being held at the Central Bank of Liberia (CBL), brought together the committees of Ministers of Finance, Governors of Central Banks and the supervisors of the West African Monetary Zone (WAMZ).

Milton A. Weeks, Executive Governor of the CBL, who delivered the opening address of the 31st joint ordinary meeting of the Economic and Monetary Affairs Committee and the Operations and Administration Committee conference, said in spite of some security and administrative challenges, significant progress has been made under the protocol relating to free movement of goods, persons and capital across our respective borders.

In this regard, “I commend the efforts made to enhance intra-regional trade under the ECOWAS Trade Liberalization Scheme (ETLS) and the movement toward a customs union through the adoption and recent implementation of the Common External Tariff (CET) in most Member States.”

In addition, Governor Weeks told the delegates that significant progress has been made under various policy harmonization programs, especially, in the areas of balance of payments statistics and the attempts to define an appropriate common monetary policy and exchange rate regime.

Over the last three decades, he said, Member States have endeavored to improve the macroeconomic fundamentals through various structural adjustment programs and policy reforms.

In fact, the Governors had, on numerous occasions, emphasized the need for prudent policies. Until recently, the growth momentum in most countries had generally been encouraging.

However, sustaining macroeconomic stability, a precondition for a successful convergence towards a credible union, has been quite elusive. Governor Weeks explained that the effects of the recent global dynamics and uncertainties on the economies in the region present a glaring evidence of the extent of our exposure to external shocks.

In spite of the domestic macroeconomic challenges, Liberia has progressed steadily in compliance with the protocols and discharge of its commitments under the ECOWAS Monetary Cooperation Program.

“I am happy to report that Liberia continued to transact business under the ETLS. The country has also acceded to ECOWAS protocol relating to CET, and intends to roll out its implementation in the next few months. Liberia is also on the path of aligning the fiscal calendar, which currently runs from July-June, to conform to that in other member States.

“Our payment systems have undergone significant improvement in recent years. With the establishment of a Liquidity Working Group (LWG) that comprises staff of the Fiscal Authority and the Bank, the Central Bank of Liberia also intends to streamline its monetary policy by establishing a monetary policy committee as soon as possible.” Weeks said.

He also informed the financial experts that the Bank is working with relevant stakeholders to address Liberia dual currency regime, in line with ongoing discussions related to the harmonization of monetary policy frameworks in the region.

In particular, “we need to find solutions to our inability to sustain performance under the macroeconomic convergence program. Indeed, this integration process requires deep rethinking, given the persistence of exogenous shocks and other structural bottlenecks confronting the region.

“It is against this backdrop that I am pleased about the inclusion of an item on the agenda relating to relevance of the macroeconomic convergence criteria as basis for a successful monetary union.  I hope that this meeting will review the convergence program objectively in conjunction with the other pertinent items on the agenda and come up with appropriate recommendations,” he added.

Moses Tule, chairman on the technical committee, expressed gratitude to President Sirleaf and Governor Weeks for the wonderful reception and all the arrangements made to ensure the success of these meetings.

He said the Euro zone crisis including the Brexit, may be threatening the very foundations of regional integration across the world. “However, I am sure we can draw key lessons from EU experience (Brexit) and intensify collective efforts in order to establish a viable monetary union,” he noted. A key lesson, according to him, is that an entry into a monetary union without strong macroeconomic fundamental could yield undesirable consequences.

The technical committee chairman also suggested that there should be a need to comply with the convergence criteria, even after the launching of the single currency.

Tule said the lack of effective monitoring mechanisms was another reason that gave rise to the fiscal excesses in some of the board fiscal responsibility such as Greece.

“This underscores the need to take on board responsibility issues before the establishment of the single currency and even beyond,” he added.

For his part, Momodou B. Saho, director general of WAMA, said given the deteriorating performance on the macroeconomic convergence front, member states need to strengthen resolve to maintain macroeconomic stability and put emphasis on economic diversification and improving the business climate in order to unleash the tremendous potential of “our region and achieve the objectives of the Monetary Cooperation program.”

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