MASERU — Finance Minister Timothy Thahane yesterday presented a M13.7 billion budget that some economic commentators described as exceptional.
Thahane said the government was able to increase this year’s budget by 36.2 percent because of a windfall that came from the Southern African Customs Union (Sacu) revenues.
“This increase is mainly from Sacu where we received an adjustment of about M900 million against the 2010/11 collections,” Thahane told parliament.
He noted that there was a projected recovery in Sacu revenues from M2.8 billion to M5 billion in 2012/13 and M4.7 billion in 2013/14.
In his 2011 budget Thahane encouraged Lesotho to apply stringent austerity measures to curb excessive spending due to a decline in Sacu revenues.
At the time the finance minister warned that Lesotho’s share from Sacu was expected to plunge from M4.9 billion in 2009/10 to M1.7 billion in 2010/11.
He warned that this cut in revenue spelt disaster for Lesotho which had traditionally relied on the Sacu revenues to fund 60 percent of its national budget.
Thahane also said domestic tax revenue was projected to increase from the 2011/12 period’s M3.9 billion to M4.4 billion in 2012/13 and M4.9 billion in 2013/14.
“Other non-tax revenues do not show very significant collection by most ministries and departments,” Thahane said.
“Their increase is expected to range from the 2011/12 fiscal period’s M720 million to M819 million in 2012/13 and M900 million in 2013/14.”
More focus would have to be given to this category of revenue in the future.
Thahane said that the total expenditure to be financed by the aforementioned including grants by development partners and loans were proposed at M13.9 million “leading to a 0.9 percent deficit of GDP”.
“This deficit is a substantial decline from the 17 percent of GDP that was budgeted in 2011/12,” he said.
The decline in the deficit is a result of an unanticipated adjustment in Sacu revenue and the projected import recovery into the customs area as well as the “low absorptive capacity of line ministries”.
Thahane also told parliament that government’s strategy in the next two years was to rebuild reserves.
The government would also strive to keep recurrent costs relatively constant in real terms except those “associated with investments in productive sectors”, the minister said.
The government would also allocate an increasing amount of resources to the capital budget which was where growth and ployment came from.
Thahane added that the government would also put more effort into mobilising domestic revenues and where external support was
concerned “first seek grants, secondly soft loans and lastly resort to commercial loans”.