The East African Community is pressing Partner States to align fiscal and monetary policies for a planned single currency by 2031. The regional project would require closer coordination of national budgets, taxes and monetary frameworks. Officials say the proposed union aims to deepen economic ties, facilitate cross-border trade and investment, reduce transaction costs and help countries respond collectively to economic shocks. It’s a demanding schedule.
The regional framework
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. The Committee on Fiscal Affairs and the Economic Affairs and Coordination Subcommittee of the Monetary Affairs Committee held separate sessions before a joint meeting from September 23 to 25.
Aime Uwase, EAC Director of Planning, called for practical arrangements to implement 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 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. They can't afford to lose time.
Reaching the target would require countries to narrow differences in inflation, fiscal deficits, debt levels, foreign-exchange reserves and monetary-policy frameworks. The proposed common currency therefore depends on greater alignment among national economic policies.
Rules for budgets, taxes and monetary policy
The Committee on Fiscal Affairs reviewed public financial management reforms intended to improve budget credibility and execution. The measures include stronger revenue and expenditure forecasting, improved cash management and tighter expenditure controls to prevent government arrears. Officials considered creating a Sub-Committee on Public Financial Management Modernisation and Harmonisation to monitor reforms across Partner States.
Tax discussions covered differences in excise duty rates, Value Added Tax harmonisation and tax administration procedures. Proposals include aligning excise duties product by product where there is agreement, while continuing consultations on rates that differ. Officials also discussed health-related taxes on tobacco, alcohol and sugar-sweetened beverages, and finalising the EAC Multilateral Agreement on Avoidance of Double Taxation.
The Economic Affairs and Coordination Subcommittee examined Kenya’s experience with risk-based credit pricing, intended to make lending rates more transparent and responsive to monetary-policy decisions. Officials also considered synchronising Partner States’ Monetary Policy Statements, while recognising differences in national policy frameworks, data availability and decision-making calendars. Those differences matter.
The Joint Session is considering national timetables to phase out central bank overdraft facilities gradually and establish ways to manage temporary government cash shortfalls. 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, and establish ways to monitor agreed actions.
Convergence hurdles and contributions
A proposed peer-review mechanism would monitor macroeconomic convergence, assess progress, identify risks and track corrective actions. At the 29th Monetary Affairs Committee meeting in July 2026, officials found that no Partner State had met all four primary convergence criteria: 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. None had 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 on July 1, 2026. Half of contributions will be equal payments, while officials will assess the remaining half according to 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 local-currency arrangements were expected to improve timely disbursement of contributions and support smoother budget execution. The convergence benchmarks are intended to support stability among countries sharing a currency; successful integration could reduce currency-related costs, simplify regional transactions and improve the predictability of cross-border investment. That’s the aim.