The Commissioner for Macroeconomic Policy and Economic Research at the Economic Community of West African States (ECOWAS), Dr. Kofi Konadu Apraku has underscored the importance of bringing definitive closure to the definition of “majority” of member states enshrined in the macroeconomic convergence pact, a process of achieving single currency in the sub-region.
According to him the definition might appear trivial but constitute a hindrance to the achievement of targets and objectives of the single currency.
Dr. Kofi Konadu Apraku further noted that the implementation to the roadmap activities and provision of adequate funding is also a crucial tour success to achieving a single currency and approval process for funding institutions implementing the roadmap activities need to be receiving for greater efficiency in implementation efficient.
He made this remarks at the opening of a technical Committee meeting on the ECOWAS single currency programme on Wednesday, June 8, 2022.
In addition, progress towards macroeconomic stability convergence suffered a setback in the advent of the covid-19 pandemic, as Member states found it extremely difficult to make progress on the convergence scale.
For this reason, the Authority of Heads of states and governments decided to invoke the exemption provision of exceptional circumstances under the convergence pact that would exempt member states from complying with the convergence criteria.
This decision provided the buffer for member states to implement virtuous economic policies that aimed at driving economic growth trajectory upwards.
ECOWAS economic recovery has been tremendously significant in the last 2 years, real GDP growth in ECOWAS improved to 4.2 per cent in 2021 from -0.7 per cent in 2020. Fiscal deficit came down to 4.6 per cent of GDP from 5.0 per cent in 2020.
However, inflation and current account balance deteriorated, the rising inflation has been attributable to rising energy crises and the continuous rapid expansion in government expenditures. The future looks bright as the projections have shown. The sum total of this picture is that our economies are on a sustainable path of recovery.
Thus, the outlook for convergence in the region may not be as challenging as had been anticipated.
The Commissioner said on convergence scale; no country met all the primary convergence criteria in 2021, with only 9 countries meeting all the secondary criteria. Meeting the target of budget deficit including grants improved from ten (10) countries in 2020, to fourteen (14) in 2021.
On the inflation criteria the picture remained the same as in 2020, and in order to improve on the performance of our Member States in the medium term, it is essential to ensure that we continue to implement prudent fiscal, monetary and exchange rate policies and adopt policy measures aimed at enhancing revenue mobilization and diversification of our economies.
“I wish to commend the efforts of several Central Banks in stabilizing the exchange rates of national currencies and the reduction in monetary financing of budget deficits. These actions have made it possible to improve the profile of macroeconomic convergence within the region”.
Again, the path to convergence in the region on a sustained basis still remains very challenging and as they work towards convergence in the medium term let us, “try and refocus our activities and prioritize essential ones to meet emerging challenges”.
For instance, the Russian-Ukraine war has affected food prices and major inputs to our fledging agro- industrial sector and would generally impact adversely on economic activities in the region partly owing to the vulnerability of our economies to external shocks.
The effective implementation of the roadmap for the ECOWAS Single Currency has been hampered by inadequate funding and limited technical capacity to ensure timely implementation of the core activities.
In this regard, there is need for technical assistance in the implementation of roadmap programmes relating to the harmonisation of economic, financial and statistical policies as well as in the harmonisation of public finance frameworks.