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Budget shocker

by Lesotho Times
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MASERU — The government plans to hike fines for traffic and other offences as it battles to raise money to fund this year’s budget.

There are also plans to hike charges for services that it provides to the public.

Charges for passports are top on the review agenda which Finance Minister Timothy Thahane suggested in February as part of the government’s plans to raise more funds.

The new charges are likely to be gazetted within the next two months, according to officials working on the issue.

A special task force was recently established to deal with the charges and services at ministry levels.

The plan is that within the next few weeks each ministry will come up with proposed charges for their services.

For instance, the home affairs ministry will suggest how much it thinks a passport should cost.

This also goes for other services that the ministry will provide like work permit identification cards.

The Ministry of Justice will suggest reviews for fines for criminal and other offences.

The Ministry of Public Works and Transport will also review traffic fines and charges for vehicle registrations.

The task force will then consolidate these proposals and submit a report to parliament.

Potable water users are likely to pay significantly more after the reviews.

Toll gate charges are also likely to be reviewed.

So too will nominal fees that people are paying at government hospitals.

But delinquent motorists are likely to be hit the most.

Fines for most traffic offences were last reviewed in the 1980s.

Thahane said the process to hike the service charges had already started.

“But it’s not only about reviewing,” he said.

“We also need to monitor the collection system to that there are no leakages and the system is not corrupted.”

The government is under pressure to generate revenue after Lesotho’s share of revenue from the Southern African Customs Union (Sacu) slumped this year.

Sacu revenues have traditionally contributed about 60 percent to Lesotho’s annual budget.

The recent plunge in the revenues has therefore forced the government to look elsewhere for money.

Last week the parliamentary portfolio committee on economics and development gave Timothy Thahane six months to explain how he will plug the holes in this year’s budget.

In a report tabled in parliament last Friday, the committee said it was worried that Thahane’s budget had not given specific details how the government will raise funds to cover the yawning gap left by the massive drop in Lesotho’s share of Sacu revenue.

Lesotho’s share from Sacu is expected to plunge from M4 918 million in 2009/10 to M1 733 million in 2011/2012.

This spells disaster for Lesotho which has traditionally relied on the Sacu revenues to fund 60 percent of its national budget.

Thahane’s much reduced budget reflected this knock on Sacu revenues but he promised to look for other domestic sources of money to cover the gap.

The committee, headed by Basotho Democratic National Party (BDNP)’s Thabang Nyeoe, said it wanted Thahane to clearly explain how he will raise the money.

 “Despite the minister’s mention of the drastic decline of the Sacu revenue in his budget speech, the committee regrettably notes that there is no mention of specific measures to be employed to mobilise domestic resources,” the report said.

“The committee recommends that within six months, the Minister of Finance should prepare a detailed report for presentation to parliament on what other sources he intends to explore to supplement the declining Sacu revenue.

“Whilst the committee applauded the decision by the government to assign the LRA (Lesotho Revenue Authority) to collect all fines, charges and rates, it is also critical to have a clear policy on the revisions and reviews of these charges, to avoid situations where they remain stagnant for years.”

The committee however warned that the “extreme caution must be exercised when reviewing charges” to avoid public outcry. 

The committee, half of whose members belong to the ruling Lesotho Congress for Democracy (LCD) party and its ally the National Independent Party (NIP), also criticised Thahane’s allocation of funds to some government ministries.

“The committee further noted that the Ministries of Defence and National Security and Foreign Affairs have been allocated 11percent of the budget whereas seven productive ministries combined together have been allocated only 9.8 percent of the recurrent budget.”

This according to the committee is a “lopsided allocation”.

The committee also criticised Thahane for not providing enough resources to the tourism ministry.

“Although tourism has been identified as one of the potential growth sectors in the economy, not enough resources have been allocated to this sector and its contribution to the GDP has been dismal.

“This clearly points to the mismatch between policy pronouncements and resource allocation.

“It has been allocated just 1.9 percent of the total proposed budget, and as such Lesotho may not be able to reap the benefits of the 2010 World Cup,” said the committee.

The committee also said it regretted that the Ministry of Agriculture had only been allocated 3.8 percent of the total budget despite the fact that agriculture supports the livelihood of most families in the country.

“The government has identified agriculture as one of the growth sectors but its allocation of the budget is only 3.8 percent which is regrettable.”

Close to 86 percent of Lesotho’s two million people depend on agriculture for a living.

“The concept of block farming and subsidisation of inputs by the government is very commendable though the implementation of the programme was flawed.

“The government should formulate clear guidelines on the implementation of this programme and how the outstanding loans will be recovered,” the committee said.

The report also summarised submissions by other government ministries, civil society organisations and individuals to the committee after Thahane presented the budget to parliament.

The Lesotho Council of NGOs (LCN) is one of the civil society organisations that submitted its views of the budget to the committee.

The LCN is reported to have said there was a missing link between policy and its implementation in Thahane’s budget speech.

LCN pointed out that the current budget is based on the Vision 2020 objectives.

This strategy, LCN said, “was too broad to enable effective tracking and monitoring of policy priorities.”

Thahane’s budget was also under attack from the civic group, Development for Peace Education, which said its process had not been participatory but was “elitist and dominated by civil servants, many of whom have never set foot in some of the poorest areas of Lesotho.”

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