The 2020 proposed date for the launch of single currency for West Africa may not be actualised as many countries within the region are yet to meet the convergence criteria for the monetary union.
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The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed confirmed the development at the opening session of a meeting of ECOWAS ministerial committee of ministers of finances and governors of Central Banks.
She confirmed on Friday that only Togo had met all the convergence criteria within the last two years for the union on the single currency programme.
The member countries that made up ECOWAS are Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger,
The idea of the single currency for the West African region was first discussed 30 years ago. It was intended to boost cross border trade and economic development.
For any country to be included into the monetary union, they must meet three primary and three secondary criteria. The three primary criteria includes;
- A budget deficit of not more than three per cent.
- Average annual inflation of less than ten per cent with a long term goal of not more than five per cent.
- A gross reserve that could finance at least three months of imports.
While the three secondary convergence criteria includes;
- Public debt/Gross Domestic Product of not more than 70 per cent.
- Central bank financing of budget deficit should not be more than ten per cent of previous year’s tax revenue.
- Nominal exchange rate variation of plus or minus ten per cent.
“The single currency known as ‘Eco’ will be based on a flexible exchange rate regime, coupled with a monetary policy framework that would be focused on inflation targeting.”Nigeria Minister of Finance Zainab Ahmed
The launch of the single currency for West Africa by ECOWAS was previously announced around February 2019.