Lusaka, Sunday, October 13, 2019: Central Banks of 10 COMESA Member States namely: Djibouti, Egypt, Eswatini, Eritrea, Libya, Rwanda, Sudan, Uganda, Zambia and Zimbabwe have benefited from a capacity building initiative on the management of international reserves.

This is through training conducted in Cairo, Egypt from 15th to 19th September 2019, under the theme: ‘Active and Passive Reserve Management’. It was organized by the COMESA Monetary Institute (CMI) in collaboration with Central Bank of Egypt.

The training followed the Decision of the 39th Meeting of the Bureau of the COMESA Committee of Governors of Central Banks held in Djibouti, on 4th December 2018. The objective of the training was to provide practical tools and techniques for fixed income portfolio management in a central bank’s reserve management framework.

At the training, the Director of the CMI, Mr. Ibrahim Zeidy underscored the need for in-depth understanding of the role of portfolio management techniques, re-balancing and bench-marking operations as well as different active and passive reserve management strategies.

“Maintenance of adequate level of international reserves is a very important criterion for achieving the COMESA Macroeconomic Convergence Criteria,” he said.

In her statement, the Governor’s advisor for African Affairs in the Central Bank of Egypt, Dr. Naglaa Nozahie, noted that the skills acquired will ensure that Central Banks in the region utilize international reserve efficiently.

Meanwhile, economies in the COMESA region have recently been vulnerable to external shocks, key among them recession/slowdown in advanced/emerging economies, unfavourable terms of trade, decline in international commodity prices, and rise in international oil prices.

Findings from studies conducted by Central Banks indicate that commodity price shocks, terms of trade shocks and international oil price shocks constitute the key external shocks that adversely affect domestic variable in COMESA region.

However, the extent of the impact and the speed of transmission vary from one country to another. The main common policy recommendations across most of the studies is the need for value addition to improve terms of trade.

Last week, 30 September – 2 October 2019, in Nairobi, Kenya, the CMI brought together experts from Central Banks in COMESA countries to validate the studies undertaken in 2019 which will inform appropriate policies to mitigate external shocks.

Attended by delegates from Djibouti, DR Congo, Egypt, Eswatini, Kenya, Madagascar, Malawi, Mauritius, Sudan, Uganda, Zambia, and Zimbabwe, the meeting stressed the need to diversify the countries’ economies, to mitigate the adverse impact of external shocks, among other policy considerations.

In December last year, the Bureau of the COMESA Committee of Governors of Central Banks instructed the CMI to organize a validation workshop for the studies undertaken in 2019 under the Monetary and Exchange Rate Policies Sub-Committee.

The motivation for the Governor’s instruction was the realization that external shocks exogenous to an individual economy and beyond its control, tend to have serious effects on most macroeconomic indicators of an individual country.