The common currency for the five-member West African Monetary Zone (WAMZ), the Eco, is to be introduced on schedule in December 2009. The Director of Operations of the West African Monetary Institute (WAMI), Mr. Odiaka Chris Okolie, who gave the assurance in an interview with B&FT, said the zone is ready in terms of qualitative indicators and macroeconomic developments within the zone that point to the achievement of the needed primary quantitative criteria. Okolie's assurance is opposed to the general opinion that the Eco cannot meet its deadline due to ill preparedness of members of the Zone. As part of qualitative preparations, member-countries are to establish Real Time Gross Payment Systems (RTGPS) for their banking sectors which Ghana and Nigeria, two of the member countries have achieved. The process for establishing those of The Gambia, Guinea and Sierra Leone has begun, following a US$23 million support from the African Development Bank (AfDB) for the three countries to set up the payment systems as well as for the modernisation and harmonisation of the systems across the zone. "The tender advertisement for consultancy service on the project is currently underway and will be completed on schedule," Okolie said. In further developments, member countries agreed at the convergence Council Meeting in June this year to harmonise their payment settlement policies in line with WAMZ payment system statutes and to promote the WAMZ common cheque standard in their banking systems. Okolie said the need was stressed at the council meeting in November this year for member countries to promote the convertibility of the cedi, naira, dalasi, Guinean franc, and the leone in their respective countries through the banks and forex bureaux to facilitate the process of creating one economic unit for the Zone. He described the trend as quantitatively encouraging, pointing to an increase in average real economic growth rate for member countries from 5.6 percent in 2006 to 6.1 percent last year; reduction in inflation from 11.5 percent to 8.2 percent over the period; and a solid gross international reserve base which was adequate to cover 11.5 months of imports at the end of 2007. The primary convergence criteria include reduction of budget deficit to GDP ratio to a maximum of 3 percent; reduction of central bank deficit financing to a ceiling of 10 percent of the previous year's fiscal revenue; maintenance of a maximum 5 percent inflation rate; and maintenance of gross international reserves to cover at least six months of imports. From 2006 to end of June this year, The Gambia had sustained performance on the four primary criteria; Nigeria performed on three, slipping on the single digit inflation target. Guinea and Sierra Leone met two of them, failing on the single-digit inflation and import cover criteria; while Ghana could only sustain the central bank deficit financing criterion. The WAMZ statutes stipulate that the monetary union could take-off if two member-countries meet all the four primary convergence criteria. By this provision, Okolie said, nothing stops the Eco from meeting the deadline because second-half economic performances of member-countries point in a positive direction and next year promises to be better. Even though the Central Bank for the Zone, to be located in Ghana, is yet to be set up, Okolie said, this will not hinder introduction of the common currency because the bank building is not a prerequisite for commencement of the process. Some of the secondary criteria, which need not necessarily be met before the Eco comes into force, include elimination of domestic arrears, fiscal receipt-to-GDP ratio of 20 percent minimum, wage bill-to-total fiscal receipts ratio of 35 percent maximum, minimum of 20 percent public investment-to-tax receipts ratio, real exchange rate stability and positive real interest rate. To hasten the monetary integration process of West Africa, a two-track approach was adopted by the Summit of Heads of State and Government in Lome in 1999. This led to the April 2000 Accra Declaration in which the five countries agreed to form a second monetary zone known as the WAMZ by 2004, which would later merge with the West Africa Economic and Monetary Union (UEMOA) the monetary union for the French-speaking countries to form the West African Monetary Union. Source: B&FT