The International Monetary Fund (IMF) on Wednesday approved $49.1 million loan for Lesotho to respond to COVID-19 economic fallout.
IMF said $16.5 million was approved under the Rapid Credit Facility and $32.6 million was approved under the Rapid Financing Instrument, bringing the total amount of about $49.1 million, to help Lesotho meet urgent balance of payments needs stemming from the COVID-19 pandemic.
According to the IMF, the economic consequences of the COVID-19 pandemic in Lesotho have been severe, with a weak global and regional environment reducing exports and remittances.
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“The pandemic comes at a time when Lesotho’s economy was already facing challenges. Growth has been subdued for several years, reflecting structural bottlenecks and a weak regional environment, while government finances have struggled to cope with the volatility of transfers from the Southern African Customs Union (SACU) that account for around half of total revenues,” IMF added.
“The COVID-19 pandemic is having a severe social and economic impact on Lesotho. Disruptions to supply chains for major industries and a national shutdown to contain the virus have led to a sharp drop in production. The economy is being further hit by declining external demand for textiles and diamonds, shrinking remittances, and delays to major construction projects,” said Mr. Tao Zhang, a Deputy Managing Director and Acting Chair at the IMF.
According to him, “Once COVID-19 subsides and in the context of a likely drop in SACU revenues, there is an urgent need to strengthen economic fundamentals and ensure debt sustainability by carrying out fiscal consolidation and implementing growth-enhancing structural reforms. The COVID-19 crisis heightens the importance of a steadfast implementation of pro -growth reforms to ensure sustainable and inclusive medium-term growth.”