MASERU — Volatile Southern African Customs Union (Sacu) revenue could be a threat to the smooth implementation of the National Strategic Development Plan (NSDP) and Public Finance Management reform, the International Monetary Fund (IMF) said.
Deputy Division Chief at IMF’s African Department David Dunn told a press briefing this week that the team appreciated the opportunity they had to hold discussions with authorities in Lesotho’s public and private sectors.
“Following the completion of the three-year credit arrangement under IMF’s Extended Credit Facility, the Lesotho authorities expressed the need to pursue an economic policy agenda that prioritises macroeconomic stability and further strengthens growth, employment and poverty reduction in line with the NSDP,” said Dunn.
Dunn led an IMF team on a week-long visit to Lesotho to discuss economic policies ahead of the upcoming Article IV consultation in January next year.
During their visit, the IMF team met with ministers of finance, development planning and health, the Governor of the Central Bank of Lesotho (CBL), the economic cluster as well as members of the public accounts committee, senior government and CBL officials.
One of the major issues raised during the discussions was the challenge of managing highly volatile government revenues such as those from Sacu to ensure that resources are readily available for planned public investment.
“Economic growth has been good but the growth has not translated into employment creation, the government has shown desire to step up implementation of the NSDP through the investment plan,” Dunn said.
He said “the Article IV consultation will allow for a comprehensive dialogue on policies to maintain medium term economic stability and strengthen growth”.
Other issues to be discussed at the Article IV consultation include Lesotho’s international competitiveness, the adequacy of its official international reserves, the financial sector and debt sustainability.
On international reserves, Dunn said government’s focus has been on building reserves that were used up during the period of decline in Sacu revenue.
“The focus on building reserves had led to a delay in implementing the NSDP, now efforts can be shifted to more pressing needs like employment creation,” he said.