The East African Community (EAC) has barred partner states from relying on central bank overdrafts to plug budget shortfalls, and appointed Kenya to lead the search for alternative financing mechanisms. The move is aimed at forcing tighter fiscal discipline ahead of the planned single currency regime in five years.
The decision by the EAC Sectoral Council on Finance and Economic Affairs (SCFEA) effectively cuts off a long-used emergency funding route for governments and is designed to help member states rein in public debt, inflationary pressure and fiscal slippages before the bloc adopts a common currency in 2031.
