cooperation and mutual surveillance, the process of convergence has stalled in recent years
(Doré and Masson 2002).3
Several studies have questioned that a monetary union between the two areas is a
good idea since most of the standard criteria along the optimum currency area lines are not
fulfilled. It has in particular been pointed out that monetary union in West Africa is
problematic because mechanisms that ensure a prudent fiscal policy are absent. There are
several countries that have large fiscal deficits of up to more than 10 percent of GDP
(Masson and Patillo 2001 b), reflecting distortions that lead to excessive deficits because
rulers have an interest to benefit certain groups in the economy (Debrun et al. 2002). As
Guillaume and Stasavage (2000) argue, African countries lack the institutions that ensure
financial and fiscal stability. And although there are the fiscal convergence requirements for
prospective members of the monetary union there is no procedure how failures to meet the
criteria should be treated.
The discussion about the desirability of fiscal targets accompanying a movement
towards a common currency is, of course, well known from the discussion about the
European Monetary Union (EMU). In Africa, however, one could sensibly argue that
problems of spillovers from an excessive fiscal policy on the monetary policy are a much
more salient problem because the independence of central bank is much less secured (Fouda
and Stasavage 2000). Rates of seigniorage are considerably higher than, for instance, in the
European Monetary Union and it is feared that, unless significant structural fiscal
adjustments are undertaken by the member countries, uncoordinated fiscal policy will have
negative externalities on the common money. Thus, even fulfilling nominal convergence
criteria in fiscal policy could not be considered as being adequate to put fiscal policy on a
sound base because insufficiently developed fiscal system and high budgetary needs will
3 France has had a significant influence on the workings of the CFA-France Zone.
This includes the problems the Zone has had with reaching fiscal discipline since France
was not willing to use its authority to this end, see Stasavage (1997).