No East African Community member has met all four primary convergence criteria for a shared currency. The 29th Monetary Affairs Committee meeting reached that finding in July 2026. Against that backdrop, fiscal and central bank officials will gather in Arusha for five days, from September 21 to 25, 2026, to press ahead with a single currency targeted for 2031.
The Test Partner States Haven't Passed
The benchmarks are precise: headline inflation of no more than 8 per cent, foreign-reserve cover of at least 4.5 months of imports, an overall fiscal deficit—including grants—of no more than 3 per cent of GDP, and gross public debt of no more than 50 per cent of GDP in net present value terms. They’re intended to support macroeconomic stability among countries sharing a currency. At present, no Partner State meets all four.
Dr Albert Musisi, Chairperson of the Joint Session and Commissioner in Uganda's Ministry of Finance, Planning and Economic Development, urged Partner States to speed up work on the East African Monetary Union Roadmap. With about five years left, he called on them to meet agreed timelines and reach consensus on unresolved issues. “We therefore need to increase momentum to ensure that we deliver despite the global economic challenges that we are facing,” he said.
Budget Discipline and Central Bank Limits
In Arusha, much of the work focused on how governments manage their own books. The Committee on Fiscal Affairs reviewed public financial management reforms intended to improve budget credibility and execution. The reforms include better revenue and expenditure forecasting, stronger cash management, and tighter expenditure controls to prevent government arrears. Officials also considered creating a Sub-Committee on Public Financial Management Modernisation and Harmonisation to monitor follow-through across Partner States.
The Joint Session is considering national timetables for gradually phasing out central bank overdraft facilities. It’s also assessing options for handling temporary government cash shortfalls. The proposed approach takes account of differences in legal frameworks, fiscal positions and financial markets. It calls for improved 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 and establish ways to monitor agreed actions.
Taxes and Trade
Officials discussed differences in excise duty rates, VAT harmonisation and tax administration procedures. One proposal would harmonise excise duties product by product where agreement exists, while consultations continue on differing rates. Talks also covered health-related taxes on tobacco, alcohol and sugar-sweetened beverages, as well as finalising the EAC Multilateral Agreement on Avoidance of Double Taxation. A more harmonised tax environment could give cross-border businesses greater certainty and reduce some complexity in regional trade and investment.
The Economic Affairs and Coordination Subcommittee reviewed 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 Monetary Policy Statements, while recognising differences in national frameworks, data availability and decision-making calendars.
Paying the Bills in Local Currency
The region is developing arrangements for Partner States to pay annual EAC contributions in local currencies. The move follows the 25th Ordinary Summit of EAC Heads of State adopting a new financing formula, effective July 1, 2026. Half of contributions will be equal contributions. The other half will be assessed using each state's average GDP per capita over the preceding five years. Officials are examining exchange-rate references, valuation, settlement and foreign-exchange risk management. Aime Uwase, EAC Director of Planning, said the arrangements should improve timely disbursement and support smoother budget execution.
Officials have proposed a peer-review mechanism to monitor convergence, identify emerging risks and track corrective actions.
Why This Matters:
A shared currency links every member’s budgets, debts and reserves, giving the convergence criteria real weight. The July finding that no Partner State meets all four benchmarks makes clear how much fiscal work remains with roughly five years to go. The measures now under discussion—tighter expenditure controls, arrears prevention, phased-out central bank overdrafts and peer review—put greater emphasis on budget discipline at home. Officials say businesses and investors could benefit from lower currency costs and more predictable cross-border investment. But that payoff depends on governments meeting deficit, debt, inflation and reserve targets they haven’t yet met. Deadlines alone won’t get them there.