‘Don’t rush into EAC Monetary Union’ warns IMF chief
East African countries signing the Monetary Union Protocol should learn from the experiences of other nations in order to avoid mistakes, noted Christine Lagarde. (Image: IMF)
International Monetary Fund (IMF) Managing Director Christine Lagarde advised the Kenya Private Sector Alliance Forum that East Africa should not rush headlong into the East African Community (EAC) Monetary Union.
Lagarde, who is presently in Nairobi to underscore the IMF’s commitment to Kenya, noted that many issues, such as increasing non-tariff barriers, varying economies and different tax regimes in respective countries, need to be resolved before East Africa can enter the EAC Monetary Union.
According to Lagarde, the other EAC member states – Burundi, Rwanda, Tanzania and Uganda – should be guided by Kenya, which is a strong advocate of regional economic integration.
East African countries signing the Monetary Union Protocol should learn from the experiences of other nations in order to avoid mistakes, the IMF chief noted. In this context, taking a leaf out of the book of the European Union would be useful indeed.
Lagarde also stressed that the IMF has always been Kenya’s partner in difficult situations.
“We have been by Kenya’s side through the many challenges you have faced. We were here during the 2009 global downturn, during the 2011 drought, and we stood with you during the Westgate attack,” she stated.
She elaborated on three broad themes – the immediate outlook for the global economy; the outlook for Sub-Saharan Africa; and the key priorities that will give Kenya the chance to reach an emerging market status.
With 5.6 per cent GDP growth on average over the past decade, Sub-Saharan Africa is considered the second fastest growing region in the world. For the last decade, East African countries experienced strong growth and now Africa is beginning to take its rightful place at the table of global prosperity, the IMF chief highlighted.
Living standards have improved and poverty levels have declined in many countries on the back of such growth. Further, the African region has been largely insulated from the economic crisis due to low inflation, reduced levels of public debt, and adequate reserve levels, Lagarde noted.
The IMF is looking forward to release its revised forecasts for the global economic environment outlook in a few weeks.
Lagarde noted that it is ‘not impossible for Kenya to achieve middle-income status’ and concluded by declaring that the country’s hope for greater economic prosperity is warranted.