Abstract
Monetary Union in West Africa (ECOWAS): Is it Desirable and How Could It Be Achieved?
IMF Occasional Paper No. 204
Monetary Union in West Africa (ECOWAS): Is it Desirable and How Could It Be Achieved?
Paul Masson and Catherine Pattillo
Six non-CFA-zone members of the Economic Community of West African States (ECOWAS) have launched an ambitious initiative to set up a second monetary union and common currency area in West Africa by January 2003, as a first step toward wider monetary union among all the ECOWAS (CFA and non-CFA) countries by 2004. Following a survey of the lessons learned from other monetary unions, the paper evaluates whether such a monetary union makes economic sense. Pointing out that monetary union is neither necessary nor sufficient to achieve other aspects of regional integration, the authors urge the ECOWAS countries to invest their energies in the structural policies, instead of trying to meet very short deadlines for monetary union. A looser form of monetary cooperation would help to increase exchange rate stability, would be less costly, could be achieved sooner, and would allow some flexibility in response to the asymmetric shocks to which these economies are susceptible. The paper concludes that full ECOWAS monetary union should await more extensive economic convergence and reinforced political solidarity within the region.
Detailed contents of IMF Occasional Papers are available at http://www.imf.org/external/pubind.htm.
IMF Occasional Paper No. 205
Stabilization and Savings Funds for Nonrenewable Resources
Jeffrey Davis, Rolando Ossowski, James Daniel, and Steven Barnett
The revenues from exploiting large exhaustible resources such as oil can pose significant challenges for a country. Nonrenewable Resource Funds (NRFs)—which can take various forms including stabilization and savings funds—are seen as a response to these challenges. This paper examines whether NRFs can help countries pursue good fiscal and other macroeconomic policies and, if so, how NRFs should be designed to attain these objectives. Two main results emerge. First, NRFs should not be seen as a simple solution to a complex problem; rather, the question should be whether they might help improve overall fiscal policy. Second, it is important that NRFs be designed carefully to ensure their effectiveness. Key features of a well-designed NRF include: coordination of its operations with those of the rest of the public sector, effective integration with the budget, and mechanisms to ensure full transparency and accountability.
Detailed contents of IMF Occasional Papers are available at http://www.imf.org/external/pubind.htm.