Macroeconomic Policy and Institutional Convergence in Member States of Southern African Development Community

This report provides a summary of 14 national reports of Southern Africa Development Community (SADC) member states on past, present and likely future compliance of Memorandum of Understanding (MOU) on macroeconomic convergence and the Finance and Investment Protocol (FIP) adopted by Member States. The paper briefly presents an overview of developments in the world economy and implications for Southern Africa and then focuses on the progress towards the achievement of macroeconomic convergence (MEC) targets in SADC member states. It compares the actual performance against agreed macroeconomic indicators and targets in the SADC macroeconomic convergence programme, and presents prospects for the year 2007 and beyond. MEC as defined in MOU is the convergence by Member States to low and stable levels of inflation, sustainable budget deficits, public and publicly guaranteed debt and current account balances although it now includes other indicators. Although mostly the economic aspects underpinning convergence are considered, political issues are also highlighted.