Magazine article New African

West African Single Currency

Magazine article New African

West African Single Currency

Article excerpt

Ghana made remarkable progress regarding the planned second West African single currency in moving from the achievement of one convergence criterion in 2001 to achieving two additional criteria in 2003.

Member countries have four criteria to achieve in readiness for the take-off of the monetary union in July 2005. Thus, Ghana now has one more criterion--a single-digit inflation--which it is determined to achieve this year through the pursuit of sound macroeconomic policies.

The success of the European Union in embarking on its own single currency in 1999 has created a renewed strength for ECOWAS to push ahead the creation of a second currency zone in West Africa, alongside the CFA Franc.

In pursuit of this aim, the Authority of Heads of State and Government of The Gambia, Ghana, Guinea, Sierra Leone and Nigeria, at its meeting in Lome in 1999, adopted the following set of primary convergence criteria:

* A limit on budget deficit (excluding grants) of not more than 5% of GDP

* A single-digit inflation

* Central Bank financing of budget deficit limited to 10% of previous year's tax revenue

* Gross official reserves of at least 3 months of imports.

According to the provisional data on macroeconomic performance and convergence, the overall performance of the five countries worsened in 2003 relative to 2002. …

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