One way of meeting the convergence test of the West Africa Monetary Zone (WAMZ) is to find innovative ways of financing economic infrastructure without affecting the nation’s budget, Vice President Kwesi Amissah-Arthur has said.
He said regional projects could be undertaken with private sector participation and this may require the harmonisation of investment laws in the region.
The Vice President asked for lessons to be drawn from the difficulties being encountered in the Euro Zone, one of which he identified as challenges in fiscal policy harmonisation.
Vice President Amissah-Arthur gave the suggestion when he opened the 32nd meeting of the Convergence Council of the WAMZ, underway in Accra.
The Council is an assembly of Finance, Trade and Foreign Ministers with Governors of the Central Banks of the WAMZ that meets twice a year to deliberate on the progress of the zone towards the launch of a monetary union and a common currency.
The Vice President, a former Governor of the Bank of Ghana, assured the meeting of Ghana’s commitment to the WAMZ, adding that Ghana currently has no outstanding financial commitments.
He urged member countries to ensure that outstanding financial commitments to the WAMZ programme are given priority in national budgets and the benchmarks should be well respected.
Vice President Amissah-Arthur said the inability of member states to improve and sustain their performance had to do with the democratic convergence they had embarked upon and the associated electoral cycle.
“Many of our countries have failed to meet some of the primary convergence criteria in election. Especially difficult to meet is the control of the fiscal deficit,” the Vice President said, adding “this is a fact that must be confronted”.
He said the challenge facing the attainment of the zone was simply how to limit the impact of fiscal expansion on the monetary policy.
He underscored the need to extend the independence of central banks to allow them to exercise control on the expansion of fiscal policy, free from the need to meet the short term public sentiment.
“Is the Central Bank best placed to impose the discipline required for convergence,” Vice President Amissah-Arthur asked, adding: “Honourable ministers, you need to debate this issue even as we deal with the impatience of our citizens, eager to enjoy the full benefits of monetary union.”
Dr Ibrahim Bocar, President of the ECOWAS Commission, in a speech read on his behalf, expressed the need for political commitment to reach the zone and the common currency.