Single currency: Nigeria meets all primary criteria in 2013, says CBN

Central Bank Deputy Governor, Economic Policies Dr Sarah Alade, said Nigeria was the only country that met the four primary convergence criteria for attaining single currency in west African region. Alade disclosed this at the 37^th Technical Committee meeting of the West African Monetary Zones (WAMZ), in Abuja.

The four primary criteria include single-digit inflation rate at the end of each year and a fiscal deficit of not more than four per cent of the GDP. Others are a central bank deficit-financing of not more than 10 per cent of the previous year’s tax revenues and Gross External Reserves that can give import cover for a minimum of three months.

“It is important to recall that the deadline for the West African Monetary Zone (WAMZ) countries to achieve monetary integration was set at January 1, 2015. Also, the modified revenue approach under the aegis of ECOWAS was approved by assembly of heads of states and government to replace the two track approach to monetary integration in ECOWAS for January 1 2020. It is imperative for the technical committee to thoroughly interrogate the issues and identify the key challenges that need to be addressed in order to achieve the objective of single currency in our sub region.

“This exercise is very importance given the state of the macro economic convergence in the WAMZ where Nigeria is the only country that satisfy all four criteria in 2013.’’

According to her, Liberia and Sierra Leone satisfied three out of the four criteria. She said that there had been consistent challenge of year-to-year compliance of the criteria by the member states.

Alade said that discussions in the meeting would focus on WAMZ macro-economic development and convergence report, WAMZ state of preparedness for monetary integration and review of contribution proficiency to West African Monetary Institute (WAMI) budget. Others were proposal for the transformation of WAMI into WAMZ commission, WAMZ payment system development project progress update, West African capital market integration and other administration issues, she said.

Dr Nelson Magbagbeola, Acting Director of Multilateral Surveillance, ECOWAS Commission, said that the commission was committed to the integration, inclusive growth and development of the region.

On monetary integration, he said that ECOWAS heads of state had endorsed the recommendations of two presidents to review the macroeconomic convergence criteria on the single currency programme.

“Specifically, the Authority adopted the creation of a fiscal union to complement the monetary union and reduction of macroeconomic convergence criteria from 11 criteria to six criteria. The three primary criteria adopted by the heads of state last Friday are as follows: budget deficit, including grants and commitment basis, not more than three per cent of GDP. The average annual inflation should be single digit with long term goal of five per cent by 2019. The third primary criterion adopted by the heads of state is the gross reserve of three months of import.’’

According to him, the secondary convergence criteria adopted by the authority are public debt to GDP ratio of 70 per cent. Others include Central Bank financing of budget deficit of 10 per cent of previous year’s tax revenue and nominal exchange rate variation of plus or minus 10 per cent. He assured that the ECOWAS would continue to support all effort to facilitate the monetary integration process.