No Partner State in the East African Community met all four primary convergence criteria for a shared currency, according to the 29th Monetary Affairs Committee (MAC) meeting in July 2026. The target for a single currency is 2031, about five years away.
Fiscal and central bank officials spent five days in Arusha, from September 21 to 25, 2026, working to close that gap. They discussed how to carry out the East African Monetary Union (EAMU) Protocol and its revised Roadmap. The Committee on Fiscal Affairs (CFA) and the Economic Affairs and Coordination Subcommittee of the MAC met separately first. A joint session followed from September 23 to 25.
The Benchmarks Still Out of Reach
The four criteria are specific. Headline inflation can't exceed 8 per cent. Foreign-reserve cover must reach at least 4.5 months of imports. The overall fiscal deficit, including grants, can't exceed 3 per cent of GDP. Gross public debt must stay at or below 50 per cent of GDP in net present value terms. These benchmarks aim to support macroeconomic stability among countries sharing a currency.
Dr Albert Musisi, Chairperson of the Joint Session and a Commissioner in Uganda's Ministry of Finance, Planning and Economic Development, urged faster progress. He called on Partner States to meet agreed timelines and reach consensus on outstanding issues. "We therefore need to increase momentum to ensure that we deliver despite the global economic challenges that we are facing," Dr Musisi said.
Aime Uwase, EAC Director of Planning, called for practical arrangements to support implementation. "The matters before us are central to strengthening monetary and fiscal policy coordination, supporting macroeconomic stability and advancing our shared regional integration objectives," Mr Uwase said.
Officials are weighing a peer-review mechanism to track shortfalls. It would monitor macroeconomic convergence, assess progress, identify emerging risks and track corrective actions across Partner States.
Budgets, Taxes and Public Accountability
The CFA reviewed public financial management reforms aimed at improving budget credibility and execution. They include stronger revenue and expenditure forecasting, better cash management and tighter expenditure controls to prevent government arrears. Delegates considered creating a Sub-Committee on Public Financial Management Modernisation and Harmonisation to follow up on reforms across Partner States.
Tax policy drew close attention, too. Officials discussed differences in excise duty rates, Value Added Tax (VAT) harmonisation and tax administration procedures. One proposal would harmonise excise duties product by product where countries agree, while consultations continue where rates differ. The talks also covered health-related taxes on tobacco, alcohol and sugar-sweetened beverages. Officials discussed finalising the EAC Multilateral Agreement on Avoidance of Double Taxation, too. Supporters say a more harmonised tax environment could give cross-border businesses greater certainty and cut some complexity in regional trade and investment.
The joint session is also considering national timetables for gradually phasing out central bank overdraft facilities. Officials are looking at ways to manage temporary government cash shortfalls. The approach accounts for differences in Partner States' legal frameworks, fiscal positions and financial markets. It also stresses better cash-flow forecasting and deeper government securities markets. A draft Framework for Coordinating Monetary and Fiscal Policy is under review. It would clarify institutional responsibilities, provide for regular information sharing and joint assessments, and set up ways to monitor agreed actions.
Shared Costs, Shared Rules
The subcommittee examined Kenya's experience with risk-based credit pricing, which aims to make lending rates more transparent and responsive to monetary-policy decisions. Officials also considered synchronising Partner States' Monetary Policy Statements. They acknowledged differences in national policy frameworks, data availability and decision-making calendars.
The region is developing arrangements for Partner States to pay annual EAC contributions in local currencies. The 25th Ordinary Summit of EAC Heads of State adopted a new formula, effective from July 1, 2026. Half of contributions will be equal. The other half will be assessed on each Partner State's average GDP per capita over the preceding five years. Officials are examining exchange-rate references, valuation and settlement arrangements, and foreign-exchange risk management. Uwase said the arrangements were expected to improve timely disbursement and support smoother budget execution.
Why This Matters: A shared currency ties the economies of several countries together, while the people in them have little say in how that plays out. The July finding that no Partner State meets all four criteria shows how far the region remains from the 2031 target. Tighter expenditure controls aimed at preventing government arrears, along with public discussion of health taxes on tobacco, alcohol and sugary drinks, link the technical talks to public budgets and public health. Peer review and a monitoring framework would create some institutional accountability. The rules, and who carries the cost of meeting them, will depend on what Partner States do before 2031.