As ECOWAS nears single currency program review
The 34th Joint Ordinary meeting of the Economic and Monetary Affairs Committee and the Operations and Administration Committee of the West African Monetary Agency (WAMA) opened on Monday, February 18, 2019, in the Senegalese capital, Dakar. According to a dispatch from the meeting in Dakar, the Joint Meeting is in preparation for the meeting of the Committee of Governors and the Convergence Council, scheduled for February 21 and February 22, 2019, respectively, in Dakar. The key focus of the 34th Joint Meeting is to review progress on the ECOWAS Single Currency program, scheduled for 2020 as part of the ECOWAS Monetary Cooperation (EMPC).
In an Overview of the Macroeconomic Situation in the ECOWAS member states, the Director General of the Agency, Mr. Momodou Bamba Saho, disclosed that the economic activity in the ECOWAS region continued to strengthen as real GDP was projected at 3.1 percent in 2018 compared to 2.3 percent in 2017. This performance, the best since 2015, he noted, mainly reflected the outcome of interventions and investment in agriculture, construction and sustained performance in services in most countries as well as increased production of oil and gas in Ghana and Nigeria. The report further showed that Liberia and Gambia also contributed to the growth performance of the region for the period under review.
In the area of macroeconomic convergence, the WAMA Director General noted that performance improved in the first half of 2018, in the areas of budget deficit, central bank financing of the budget deficit and gross external reserves. However, he noted that the outturn remained unchanged in terms of the number of countries meeting the criterion on average inflation.
The WAMA Director General’s Report also assessed the Exchange Rate Developments in ECOWAS Member States. At the end of December 2018, he pointed out, developments in the exchange rates of ECOWAS currencies were marked by an appreciation of the CFA franc and escudo against the WAUA, while other currencies in the region weakened with respect to the WAUA. According to the WAMA Director General, the Liberian dollar experienced the highest depreciation followed by the Leone. The Naira he said, was more stable during the review period compared to the preceding period. This, Director General Saho observed, reflected trends in the international foreign exchange market but also the peculiar economic situation of some Member States. In most cases he said, Central Banks’ interventions in the foreign exchange market made it possible to at least contain fluctuations to more reasonable proportions.
“Moreover, trends in bilateral exchange rates showed that the CFA franc and the escudo were the only currencies that appreciated against all the other ECOWAS currencies. The other currencies that strengthened the most were the Guinean franc and the Naira. The Liberian dollar, on the other hand, depreciated against all ECOWAS currencies,” the WAMA Director General pointed out in his report.
In response to the depreciation of the Liberian dollar during the review period (January-July, 2018), the Liberian delegation provided clarification on the efforts by the government to stabilize the Liberian dollar, which has seen significant stability for the second half of 2018.
The Dakar meeting is, among other issues, considering progress reports of the Director General of WAMA; a report on the ECOWAS Monetary Cooperation Programme for the first half of 2018; a report on Exchange Rate Developments of ECOWAS Currencies as at the end of December 2018 and a report on the study of the effectiveness of the interest rate channel in monetary policy impulses within ECOWAS. Critical to the adoption of the Single Currency by 2020 are: the establishment of a common monetary policy framework, a common exchange rate regime, a model for the common central bank, and the name of the common currency, are also among the important tasks to be achieved by the Agency,
The meeting is also considering a status report on Relocation of WAMA headquarters; Capacity Assessment and Proposal for a New Organigram for the Agency and the 2019 Work Programme for the WAMA as well as the proposed Budget for 2019.
The joint meeting is being attended by representatives from Liberia, Guinea, Sierra Leone, Nigeria, The Gambia, Ghana and UMOA countries and other regional institutions involved with the EMCP.