COMESA Urges Fiscal Discipline Amid Rising Economic Shocks

  Key information to be aware of: Uganda's finance minister, Matia Kasaija, has called on central banks to focus on maintaini...

 

Key information to be aware of:

• Uganda's finance minister, Matia Kasaija, has called on central banks to focus on maintaining low inflation during times of global instability.

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Central Banks within the Common Market for Eastern and Southern Africa (COMESA) have been encouraged to keep inflation low and stable, even amid economic instability. Leaders have cautioned that ongoing external shocks continue to challenge the region's economic strength "to the core."

During a speech given on his behalf by Deputy Secretary of the Treasury Patrick Ocailap at the COMESA Central Bank Monetary Cooperation and Integration Symposium on November 20, Uganda's Finance Minister Matia Kasaija stated that member nations of the bloc continue to face risks from unpredictable global circumstances.

"Many of our nations rely heavily on commodities as a key source of export income and government revenue, making these shocks more severe due to the ups and downs of market cycles," Mr. Kasaija stated during the gathering in Kampala.

He stated: “During the period of rapid growth, foreign exchange inflows increase and economic expansion speeds up… However, when the downturn occurs, we face volatile currencies and decreasing reserves.”

Kasaija stated that he is convinced that central banks should focus on maintaining low and stable inflation as "a crucial basis for long-term economic development."

"Without stable prices, all our other efforts as governments to help our people escape poverty would be pointless. However, focusing on controlling inflation does not mean we stop pursuing growth and socio-economic change. No, it doesn't mean that," he explained.

He called on central banks to keep their policy tools adaptable during global crises but cautioned that monetary measures by themselves are not enough.

Fiscal officials can support struggling families and industries through focused assistance without placing excessive pressure on the Central Bank," he stated, further noting, "In contrast, fiscal responsibility strengthens the credibility of monetary policy.

He stated that unified fiscal and monetary actions continue to be essential.

"Mutual exchange of information, unified policy actions, and clear communication of policies can aid in avoiding disputes and fostering communal strength," he stated.

The Governor of the Bank of Uganda, Michael Atingi-Ego, stated that external shocks—such as global financial instability, climate-related disasters, and political conflicts—present major threats to emerging economies.

He emphasized Uganda's own experience in managing these shocks by enhancing supervision.

Resilience starts with effective macroeconomic management and strict regulatory supervision," he stated, adding, "Even with rising global fuel prices and the lingering effects of the pandemic, our financial sector stayed steady—backed by wise regulation and sufficient capital.

He observed that mobile money keeps advancing financial inclusion, "despite introducing new risks that demand careful monitoring."

"The management of monetary policy in our area is no longer a limited technical task," Dr Atingi-Ego stated.

In times of crisis, our credibility is based on maintaining stability and public trust. During recovery, it relies on making sure that growth doesn't undermine price stability.

The COMESA Secretary General, Chileshe Mpundu Kapwepwe, stated that the region has demonstrated strength in the face of global challenges.

"Significantly, the latest available figures show that trade within COMESA remained at $14 billion in both 2022 and 2023," he stated.

He mentioned that COMESA's projected export potential of $101.1 billion and the present intra-regional trade level of 6 percent indicate "a significant opportunity for growth."

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