Minister of Foreign Affairs, Geoffrey Onyeama says that the convergence criteria must be met by all ECOWAS Member states to ensure the sustainability and viability of ECO as a single currency.
Onyeama made this known when he appeared on the News Agency of Nigeria (NAN) Ministerial Forum in Abuja.
He explained that the ECO implementation is guided by certain convergence criteria: such as a budget deficit below three per cent of GDP, public debt of not more than 70 per cent of GDP, inflation of five per cent or less, and a stable exchange rate.
“The ECOWAS Community believes that monetary union is a logical component of economic and regional integration, and to have full economic integration you also need single currency.
“The issue is the mechanisms of that, and a number of countries feel that there are certain criteria; what they call convergence criteria that have to be in place to enable that to happen.
“Such as, inflation rate, you have to harmonise your economic parameters of all the countries coming in, your reserves, certain levels and debt profile has to be below a certain level.
“So, these are indices that have been put in place and it is felt that if those can be maintained for a period of three years consecutively by the countries, it means they have attained those convergence criteria.
“When you have a critical mass of countries that has attained that, then it is ripe for union, so you don’t have structural deficiencies right at the start that would make it not very viable.
“We saw that in the European Union, when Greece was no longer able to, though the EU does have these mechanisms and criteria for people coming into their currencies,’’ he said.
Onyeama said that the ECOWAS Authority of Heads of States would meet soon to resolve the divisions in the implementation of the single currency between the Francophone and Anglophone Member Countries.
According to him, some of the other countries already have a single currency, the CFA, as you know the French speaking countries of ECOWAS; they were ready to start immediately.
“But the situation now is that the non-CFA countries, which are those countries that have English colonies and one or two others like Guinea.
“So, this is the problem that we have had and it has been decided that the Heads of States will now meet again and decide how to proceed.
“So there is a bit of division, those who want to go immediately and those who feel we should wait,” he said.
NAN reports that President Muhammadu Buhari has urged the region to proceed on the implementation of ECO with caution and comply with the agreed convergence criteria, treating each other with utmost respect.
Buhari, however, expressed displeasure over the plans by francophone West Africa Countries (UEMOA) to adopt the new ECO currency over the CFA. (NAN)