Central Bank governors at their Kampala meeting Kampala, Uganda | URN | The effects of the conflicts in the Middle East and Eastern Europe have dominated the 29th Ordinary Meeting of the Monetary Affairs Committee of the East African Community, which just ended in Uganda. All seven governors of the central banks (minus DRC) decried the conflicts that export inflation to their economies and weaken their currencies and are threatening the economic growth prospects. Bank of Uganda Governor Michael Atingi-Ego stressed the importance of being prudent when handling monetary policies, in the midst of the widening current account deficits.
A country has a current account deficit when it spends more money on imports and transfers than it earns from selling its own exports abroad. The EAC countries have reversals in current account trends since the outbreak of the conflict in the Middle East, a region that has joined the top markets for the region. Atingi-Ego says this is also in turn affecting the foreign exchange reserves and calls for early warning systems and the need to build strong financial buffers, using avenues like the domestic purchase of gold.
Annette Ssemuwemba Mutaawe, EAC Deputy Secretary General in Charge of Customs, Trade and Monetary Affairs, called for quick and strong interventions that will ensure that they maintain their resilience amidst the global threats. She commended the economic growth rates in the region which pushed the average rate to an estimated 5.6 per cent in 2026, a rate higher than the sub-Saharan African average. The region also saw a growth rate of more than 30 percent in trade, including significant growth in exports, but Ssemuwemba says the trade amongst the EAC countries has not grown for the last thirteen years due to persistent trade barriers and that this exposes the region to external shocks.
The Middle East has been a major source of foreign exchange in recent years, especially export earnings from minerals like gold, agricultural products and labour. Labor has been critical in the increasing remittance for most EAC countries, but it is being threatened by the conflict in the region. Kenya Central Bank Governor Kamau Thugge says he forecasts a widening of the current account deficit, especially as exports and remittances are bound to be affected this year due to the conflict.
He adds that the country’s inflation had rema…
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