The West African Monetary Agency has acknowledged the challenges posed by global macroeconomic shocks and the inability of member states to fully meet the criteria for the complete rollout of the ECO as the single currency in the West African sub-region by 2027.
In response, the technical committee has been tasked with reassessing the roadmap and convergence pact for member countries during the ongoing Monetary Zone Conference hosted in Accra, Ghana.
The technical committee reported that member states missed the criteria for the ECO’s rollout, which include a single-digit inflation rate at the end of each year, a fiscal deficit of no more than 4% of GDP, and a central bank deficit-financing of no more than 10% of the previous year’s tax revenues.
“Turning to our compliance with the ECOWAS convergence criteria, the roadmap for the launch of the ECO requires Member States to consistently meet all the four primary convergence criteria by 2026. In 2022, only two Member States, Guinea and Liberia, met the budget deficit criterion. However, performance on the average annual inflation criterion sharply declined, with only Benin and Niger meeting the target. The central bank financing criterion also saw a deterioration in 2022, with four Member States missing the target, emphasising the need for policy reforms. Lastly, while performance on the gross external reserves criterion weakened slightly in 2022, 14 Member States still complied, showcasing the region’s resilience.”
“No Member States met all four primary convergence criteria. Four Member States (Benin, Niger, Guinea and Liberia) complied with at least three Primary Convergence Criteria.”
The Director General of the West African Monetary Agency, Momodou Bamba Saho, charged the committee with deliberating on strategic reforms to address these missed targets by member countries.
“While we have made strides in certain areas, there is a clear need for enhanced strategies and reforms to ensure all Member States align with our shared goals. Together, we can navigate these challenges and lay the foundation for a prosperous ECOWAS.”
The four primary convergence criteria largely due macroeconomic disruptions which include a single-digit inflation rate at the end of each year, a fiscal deficit of not more than four percent of GDP.
The rest are a central bank deficit-financing of not more than 10 percent of previous year’s tax revenues plus gross external reserves that can give import cover for a minimum of three months.
