By GPC Correspondent
The East African Community is stepping up efforts to align fiscal and monetary policies as member states work towards introducing a single regional currency by 2031.
The latest discussions, held in Arusha, Tanzania, from September 21 to 25, focused on improving public financial management, harmonising tax policies and strengthening coordination between fiscal authorities and central banks.
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The meetings brought together the EAC Committee on Fiscal Affairs and the Economic Affairs and Coordination Subcommittee of the Monetary Affairs Committee for joint discussions on measures required to advance the East African Monetary Union (EAMU).
EAC Director of Planning Aime Uwase said stronger coordination would be critical to maintaining economic stability and implementing the bloc’s monetary union plans.
“The matters before us are central to strengthening monetary and fiscal policy coordination, supporting macroeconomic stability, and advancing our shared regional integration objectives,” Uwase said.
The chairperson of the joint session, Uganda’s Ministry of Finance, Planning and Economic Development Commissioner Albert Musisi, called for faster implementation of the EAMU roadmap.
With about five years remaining before the 2031 target, Musisi said Partner States needed to maintain momentum and resolve outstanding issues.
“We therefore need to increase momentum to ensure that we deliver despite the global economic challenges that we are facing,” he said.
The Committee on Fiscal Affairs reviewed public financial management reforms, including improvements in revenue forecasting, cash management and expenditure controls aimed at strengthening budget execution and preventing the accumulation of government arrears.
The meeting also considered a proposal to establish a Sub-Committee on Public Financial Management Modernisation and Harmonisation to monitor reforms and improve follow-up across Partner States.
On taxation, officials discussed differences in excise duty rates, harmonisation of Value Added Tax and administrative procedures. They also considered harmonising excise duties on selected products where consensus has been reached while continuing negotiations on unresolved rates.
The discussions further covered health-related taxes on tobacco, alcohol and sugar-sweetened beverages, as well as the finalisation of an EAC Multilateral Agreement on Avoidance of Double Taxation.
The agreement is intended to simplify cross-border taxation and provide greater certainty for businesses operating across the region.
The economic affairs subcommittee also examined Kenya’s experience with risk-based credit pricing, which seeks to improve transparency in lending rates and strengthen the transmission of monetary policy.
Officials considered whether the release of monetary policy statements could be synchronised across Partner States, while taking into account differences in national policy frameworks, data availability and decision-making calendars.
The joint session also considered national timetables for phasing out central bank overdraft facilities, alongside measures to manage temporary government cash shortfalls.
A draft framework for coordinating monetary and fiscal policy is also being reviewed. It proposes clearer institutional responsibilities, regular sharing of economic information and joint assessment of economic developments.
The EAC is also developing arrangements for Partner States to make their annual contributions to the Community in local currencies.
The move follows the adoption at the 25th Ordinary Summit of EAC Heads of State of a new financing formula, which took effect on July 1, 2026.
Valuation and settlement
Under the formula, 50 per cent of contributions will be equal contributions, while the remaining 50 per cent will be assessed based on each Partner State’s average GDP per capita over the preceding five years.
The discussions are examining exchange-rate references, valuation and settlement arrangements, as well as foreign-exchange risks.
Uwase said the new arrangements were expected to improve the flow of contributions.
“Improve timely disbursement of contributions and support smoother budget execution,” he said.
The EAC is also developing a peer review mechanism to assess progress towards macroeconomic convergence, identify emerging risks and track corrective measures.
The mechanism follows a July 2026 meeting of the Monetary Affairs Committee, which noted that no Partner State had met all four primary convergence criteria.
The criteria include headline inflation of no more than 8 per cent, foreign reserve cover of at least 4.5 months of imports, an overall fiscal deficit including grants of no more than 3 per cent of GDP, and gross public debt of no more than 50 per cent of GDP in net present value terms.
The outcome of the latest deliberations will inform recommendations for consideration by the relevant EAC policy organs.
