The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has stressed the importance of collaborative efforts to enhance the macroeconomic landscape and steer the West African sub-region towards a more robust path leading to a feasible monetary union.
An evaluation of the regional economies in 2022 revealed that none of the Member States met the four primary convergence criteria. Furthermore, the number of Member States meeting at least three of these key criteria dwindled to four.
Likewise, there is no anticipation that any Member State will fulfill all four primary criteria in 2023. These criteria encompass maintaining an overall fiscal deficit of three percent, sustaining an average annual inflation rate of five percent, and ensuring gross reserves equivalent to more than three months of import coverage.
Addressing the opening session of the Joint Ordinary Meeting of the Economic and Monetary Affairs Committee and The Operations and Administration Committee of WAMA, Dr. Addison expressed concern over the performance, though he acknowledged that it was not surprising considering the challenges the region has grappled with over the past three years.
Dr. Addison questioned the feasibility of the 2026 deadline for achieving convergence, given the disruptive impacts of recurring shocks on the region. He suggested that a readiness assessment for the launch of the ECO in 2027 might be in order.
In June 2021, the Authority of ECOWAS Heads of State and Government adopted a new Roadmap for the Launch of the ECO, along with a new Macroeconomic Convergence and Stability Pact (MCSP).
This decision was made in response to the disruptions caused by the COVID-19 pandemic, which had initially derailed the planned launch of the ECO in 2020.
Dr. Addison, represented by Dr. Phillip Abraidoo-Otoo, Director of Research at the Bank of Ghana, emphasized that the new roadmap required a majority of Member States to consistently meet all the Primary Convergence Criteria on a sustainable basis by December 31, 2026.
He highlighted that the period from 2024 to 2026 would be critical for making meaningful progress with this new Roadmap.
Dr. Addison acknowledged that some progress had been achieved in implementing the roadmap despite the challenges.
Momodou Bamba Saho, the Director-General of the West Africa Monetary Agency, noted that the roadmap for the ECO’s launch mandated member states to consistently meet all four primary convergence criteria by 2026.
However, in 2022, only two Member States, Guinea and Liberia, met the budget deficit criterion. Performance on the average annual inflation criterion sharply declined, with only Benin and Niger meeting the target.
Additionally, there was a deterioration in the central bank financing criterion in 2022, with four Member States missing the target, highlighting the need for policy reforms. Although performance on the gross external reserves criterion weakened slightly in 2022, 14 Member States still complied, underscoring the region’s resilience. Nevertheless, no Member States managed to meet all four primary convergence criteria, with only Benin, Niger, Guinea, and Liberia complying with at least three of them.
In summary, Dr. Addison emphasized the need for enhanced strategies and reforms to ensure that all Member States align with shared goals. He expressed optimism that, together, they could overcome these challenges and establish a solid foundation for a prosperous ECOWAS.