Delay in the launch of the new West African Currency
The plan to launch a new currency (“the eco”) to replace the CFA franc used by several countries in West Africa may not happen for at least 5 years. Last December, the 8 countries which use the CFA franc, plus Guinea-Bissau, decided to reduce their economic ties to France, which underpins the CFA franc. However, the economic crisis caused by COVID has led to a change in plans. The International Money Fund (IMF) has forecast sub-Saharan Africa’s economy will contract more than 3% this year. Nations in the bloc have agreed to work towards reducing their budget deficits to below 3% of GDP, a measure of the value of their economies, but now that is unlikely to happen for 3 – 5 years. Other countries which do not use the CFA franc, like Nigeria and Ghana, are also interested in adopting the new regional currency. But Ghana is wary of the eco being pegged to the euro, and Nigeria wants the former French colonies to break all financial ties with Paris.
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