The East African Community’s proposed single currency carries a 2031 target. To reach it, Partner States would need to bring inflation, fiscal deficits, debt, foreign-exchange reserves and monetary policies closer together. Officials met in Arusha to review the rules intended to move the plan forward, whose stated benefits include lower transaction costs for businesses and investors.
Rules for the Union
Fiscal authorities and central bank officials met in Arusha from September 21 to 25, 2026, to discuss economic convergence and implementation of the East African Monetary Union Protocol and revised Roadmap. Separate sessions of the Committee on Fiscal Affairs and the Economic Affairs and Coordination Subcommittee of the Monetary Affairs Committee came before a joint session held from September 23 to 25.
Aime Uwase, EAC Director of Planning, urged officials to put practical arrangements in place for the protocol and Roadmap. “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.
Dr Albert Musisi, Chairperson of the Joint Session and Commissioner in Uganda’s Ministry of Finance, Planning and Economic Development, urged faster implementation to meet the 2031 target. With about five years remaining, he called on Partner States to keep to agreed timelines and resolve 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.
The Committee on Fiscal Affairs reviewed public financial management reforms designed to improve budget credibility and execution. They include stronger revenue and expenditure forecasting, improved cash management and tighter expenditure controls to prevent government arrears. Officials also considered setting up a subcommittee to monitor public financial management reforms across Partner States.
Taxes, Credit and State Finance
Officials discussed differences in excise duty rates, Value Added Tax harmonisation and tax administration procedures. One proposal would align excise duties product by product where there’s agreement, while consultations continue where rates differ. Discussions also covered taxes on tobacco, alcohol and sugar-sweetened beverages, as well as completing the EAC Multilateral Agreement on Avoidance of Double Taxation.
A more harmonised tax environment is intended to give cross-border businesses greater certainty and reduce complications in regional trade and investment. Officials also examined Kenya’s experience with risk-based credit pricing, which aims to make lending rates more transparent and responsive to monetary-policy decisions. They considered synchronising Partner States’ Monetary Policy Statements, while recognising differences in national policy frameworks, data availability and decision-making calendars.
The joint session is considering national timetables to gradually phase out central bank overdraft facilities and establish ways to manage temporary government cash shortfalls. The proposed approach accounts for differences in legal frameworks, fiscal positions and financial markets. Officials also identified better cash-flow forecasting and deeper government securities markets as important to that effort.
Officials are reviewing a draft framework for coordinating monetary and fiscal policy. It would clarify institutional responsibilities, provide for regular information sharing and joint assessments of economic developments, and establish ways to monitor agreed actions.
Convergence Benchmarks
At its 29th meeting in July 2026, the Monetary Affairs Committee found that no Partner State had met all four primary convergence criteria. The benchmarks are 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.
A proposed peer-review mechanism would monitor convergence, assess progress, identify emerging risks and track corrective actions. The benchmarks aim to support stability among countries sharing a currency; the source account says no Partner State has met all four.
The region is also developing arrangements for Partner States to pay annual EAC contributions in local currencies. A new financing formula, adopted at the 25th Ordinary Summit of EAC Heads of State, took effect July 1, 2026. Half of contributions will be equal payments, while officials will assess the other half according to each Partner State’s average GDP per capita over the preceding five years. They are examining exchange-rate references, valuation, settlement and foreign-exchange risk management. Uwase said the arrangements were expected to improve timely disbursement and support smoother budget execution.
Integration could reduce currency-related costs for businesses and investors, simplify regional transactions and make cross-border investment more predictable. The proposed rules require governments to coordinate budgets, taxes, monetary policy and debt against common benchmarks. The currency target remains 2031.