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Accountant unpacks budget expectations

by Lesotho Times
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The 2014/2015 budget will be unveiled next week. Lesotho Times’s Business Reporter Letuka Chafotsa spoke to Malehlohonolo Likhapha Mahase to unpack what experts expect from the budget.

Mahase is a chartered accountant and audit partner at New Dawn Chartered Accountants. She is the Former Lesotho Institute of Accountants’ technical manager.

LT. What are your expectations on the upcoming budget for the economic year 2014/2015?

MLM. Before going into some of the expectations with regard to the budget, it would be amiss not to acknowledge a few noted achievements and improvements over the last fiscal year.

For years, Lesotho Annual Financial Statements had not been compiled, prepared and submitted to the Office of the Auditor General for Audit, but in the last fiscal year we have witnessed the submission of financial statements for the years ending 2011, 2012 and 2013 for the government of Lesotho from the Office of the Accountant General to the Office of the Auditor General.

Also, deserving of applause was the establishment of the Public Financial Management Reform Secretariat which serves to oversee implementation of planned reforms in the public sector.

LT. What could be the expectations of the recurrent capital ratio in the upcoming budget given the underdeveloped infrastructure we have?

MLM. The trend has for long been to allocate a large portion of the budget to recurrent spending and considerably less on capital expenditure. Alternatively, during time to freeze funds, then the capital expenditure would be the one that gets largely sacrificed.

The overarching expectation for the 2014/2015 budget is for funds allocation to be skewed in favour of capital expenditure 40-60 ratio, thus recurrent capital.

On the revenue side, non-tax income that has previously been unaccounted for needs to be recorded and budgeted for.

LT. What could be the major sources of our revenue?

MLM. A substantial portion of revenue is expected to come from Southern African Customs Union (SACU), however, past experience has shown there is need for sustainable options to ‘self-finance’ and reduce dependency on SACU revenues which are volatile and susceptible to further decline. It is equally important to build reserves to increase the economy’s self-sustainability, resilience and reduce the need for loans and grants.

LT. Considering investment climate in Lesotho what should the private sector expect?

MLM .Small, Micro, Medium Enterprises (SMMEs) are the key drivers of economic growth and job creation and therefore it is expected that the upcoming budget will cater largely for SMME development, specifically towards the establishment and growth of start up business enterprises, training and support facilities as well as enhancing the capacity of relevant parastatals like the Basotho Enterprise Development Corporation (BEDCO).

It is also expected that the budget will consider the dire need for locally owned factories that produce goods for local consumption and potentially for export.

LT.  What about tourism in Lesotho, is it really an issue that should be one of the top priorities of the government?

Tourism sector remains an untapped treasure for Lesotho, one which could make an enormous contribution to our economy but is currently underutilized and under marketed.

The 2014/2015 budget is expected to allocate funds earmarked for initiatives aimed at commercializing the tourism industry and promoting our local wonders on international platforms as well the training and skilling of herd boys to become tour guides.

LT. What other sector that could be of paramount importance in the upcoming budget.

The mining industry in Lesotho has proven to be a growing market, with a lot of potential and increasingly growing foreign interest in diamond minerals beneath our land.

There is need to take advantage of this situation and move up the value chain to become not just producers of minerals but also a development hub operating in the secondary and tertiary production of the minerals therefore it is expected that the budget would make the necessary fund allocations to enhance capacity to operate in activities like diamond polishing.

LT .Anything to say on the Agricultural sector?

Lesotho was for long known for both stock and crop farming, areas which have been gravely affected by changes in climate conditions. However, there still is potential for development in the agriculture and investment in modern and conventional methods of farming including (for instance protected farming) greenhouse crop production and commercial farming and aquaculture.

Agriculture also holds the key to reduced dependency on imported food which is getting increasingly costly. Food produced locally will offer cheaper alternatives. Hence, it would aid in poverty reduction and potential for exports. Funds should be dedicated towards research on agricultural needs relevant to Lesotho and finding applicable methods.

LT.  What can you say about the Public Service Delivery, is production matching the spending?

Lack of patriotism, low staff morale and lack of servant hood amongst the public servants has been and is still a great challenge to the national service delivery.

These have also been reported as the breeding ground for fraud and corruption. 

A motivated workforce is a productive workforce, therefore it would be expected that provision be made for re-training, team building and re-skilling of public sector employees. It would enhance excellent implementation of the newly enacted policies and laws such as the Public Financial Management and Accountability Act.

In conclusion, it is very vital for every Mosotho to take an individual and separate responsibility to ensure that what will be planned and budgeted for is effectively and efficiently implemented for the betterment of Lesotho.

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