Lesotho’s economy remains sluggish as political uncertainty grows and drought hits hard, IMF says

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Lesotho, a small kingdom surrounded completely by South Africa, has been making international news for sometime now, especially after the wife of the country’s Prime Minister was charged last week with killing his ex-wife just two days to his inauguration in 2017.

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On Tuesday, there were more bad news. The International Monetary Fund (IMF) said the economy of the kingdom “remains sluggish, as policy uncertainty, weak regional growth, and recurring drought continue to weigh on growth and depress investment and job creation”.

The latest assessment of the kingdom’s economy came after an IMF staff team, led by Joseph Thornton, visited Maseru from January 29 – February 11, 2020, to conduct the 2019 Article IV Consultation discussions with the Kingdom of Lesotho.

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“While work on the Second Lesotho Highlands Water Project is keeping growth positive, prospects for exports and remittances are unpromising given continued subdued growth in South Africa and depressed prices for key exports. Government finances have also eroded after several years of relatively low inflows from the Southern African Customs Union, with the government incurring new domestic arrears,” Mr. Thornton said in a statement received by TODAY NEWS AFRICA in Washington DC.

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He said the IMF mission discussed policy options with the government that could reignite private sector investment and address Lesotho’s long-standing challenges.

According to Thornton, for Lesotho to move forward, “measures should focus on improving governance to ensure transparency and accountability in the use of public funds, which should in turn enhance the quality of public service delivery—both infrastructure and services—to the population”. A strengthened policy environment could be attained through greater consultation with the private sector, he added.

It was not all bad news as efforts to encourage greater financial inclusion and access to finance were beginning to bear fruit, and the banking sector was stable, while its regulatory framework continued to improve.

The IMF team said it met with Minister of Finance, Dr. Majoro, Central Bank of Lesotho Governor, Dr. Matlanyane, Minister of Public Service Hon. Au, other senior officials, and financial market, business, and trade union representatives, as well as multilateral development partners.

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Simon Ateba
Simon Ateba covers the White House, the U.S. government, the International Monetary Fund, the World Bank and other financial and international institutions for Today News Africa in Washington D.C. Simon can be reached on simonateba@todaynewsafrica.com

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