THE government must cut the salaries of legislators and those of top public servants in the upcoming 2022/23 national budget.
This will help it in managing its high wage bill amid its declining revenue collection, the Consumers Protection Association (CPA) has said.
Finance Minister, Thabo Sophonea, is tomorrow expected to present the much-awaited 2022/23 national budget estimates. The CPA this week said cost cutting should be prioritised in the context of the negative economic effects of the Covid-19 pandemic on Lesotho.
Mr Sophonea’s first budget, the one for the 2021/22 financial year, was notable for several unpopular proposals which the public will be watching out for in this week’s speech.
Among others, the M23, 8 billion 2021/22 budget proposed no inflation-based annual salary increase for public servants. It also kept the old age pensions stagnant despite inflationary pressures. There was also no tax relief for taxpayers whose income had been decimated by the Covid-19 induced inflationary effects.
And Public Service Minister, Keketso Sello, has already poured cold water on any hopes for a salary increase for the coming financial year.
Mr Sello a fortnight ago told the National Assembly that public servants’ salaries could only be increased if the government secured financial assistance from the International Monetary Fund (IMF). Even when the IMF has approved the financial assistance, it will take at least three years for civil servant’s salaries to be adjusted, he said.
In its end of mission report on Lesotho last October, the IMF said the economy had been in recession since 2017.
In anticipation of this year’s budget speech, CPA director, Nkareng Letsie, said he was expecting the government to address its high wage bill by cutting down on salaries of members of parliament and other top public servants to release the burden on the government coffers.
“To manage its unsustainable wage bill in line with the reduced revenue, parliament should consider cutting the salaries of members of parliament and other top government officials,” Mr Letsie said.
The economy has been contracting and this means that our tax base has shrunk, and the best thing to do in this case is to cut down on the salaries to manage expenditure against reduced revenue, he said.
In the current 2021/22 financial year, legislators granted themselves monthly M5000 tax free fuel allowances as part of their financial benefits through the passing of the Members of Parliament (Amendment of Schedule) Regulations of 2020, which had been tabled by Deputy Prime Minister, Mathibeli Mokhothu.
The passing of the regulations caused a public outcry with many saying that the funds could be better used in the country’s efforts to fight the Covid-19 pandemic.
Apart from the petrol allowances, legislators earn more than M37 000 monthly, and receive M3000 monthly housing allowances and M150 daily sitting allowances.
Mr Letsie also said the government must set aside resources to rehabilitate the deteriorated roads infrastructure to support business activities around the country.
“The government must set money aside to maintain the existing road network to support business activity. The longer we take to repair the roads, the more we will spend to recover the road,” Mr Letsie said.
He added that more resources must also be devoted towards fighting corruption in public procurement as this was where a lot of money was being lost.
Private Sector Foundation of Lesotho (PSFL) chief executive officer, Thabo Qhesi, said the government must prioritise settling its outstanding debts owed to suppliers.
He said he was also expecting the government to come up with a stimulus package to support businesses that have been negatively affected by the Covid-19 pandemic.
“The budget must prioritise settling outstanding debts to suppliers who are suffering cash flow problems,” Mr Qhesi said.
“The government must come up with a stimulus package with lenient repayment terms that will assist businesses to revive their ailing operations in the wake of the Covid-19 pandemic.”
He said a solid economic recovery plan after the Covid-19 was also necessary to support the rest of the economy.
Khotso Lepheana, the Lesotho National Farmers’ Union (LENAFU) programmes manager, said the government must privatise the existing summer cropping subsidy for increased efficiency. Instead of the government running the programme, it should contract private sector players to implement the subsidy.
“The government must consider privatising the grains subsidy and expand it to cover winter cropping, horticulture and livestock. It must just set aside a budget and engage private sector agro dealers to execute the subsidy. The players should be appointed through a competitive process,” Mr Lepheana said.
The government must invest in agricultural machinery to enhance productivity. He said many farmers lose part of their harvest due to shortage of harvesting equipment which is faster and more efficient than manual labour.
Mr Lepheana said the government must also come up with appropriate youth incentives to encourage them to venture into agriculture for job creation and economic development.
On their part, young people coalesced under the #Bachashutdown movement, called on the government to introduce cash grants to unemployed Basotho.
“The government should, as a matter of urgency, implement a monthly cash grant paid to Basotho who are struggling to make ends meet. The eligibility criteria for the grant should limit the number of beneficiaries to only the unemployed individuals aged 18 to 59.
“This will ensure that each loti spent in transfers goes directly to the poor. Also, linking the eligibility to employment status will ensure that the support is only temporary and falls away when beneficiaries graduate out of unemployment. It will avoid entrenching the culture of dependency,” the youths said.