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IMF gives Lesotho the thumbs up

by Lesotho Times

MASERU — The International Monetary Fund (IMF) mission to Lesotho has given the country the thumbs up over the way the government handled the Extended Credit Facility (ECF) programme. The ECF is an IMF financial support programme that assists countries with extended balance of payment support. The IMF head of mission, Jiro Honda, said they were happy with how the government of Lesotho had implemented the programme. “Programme performance for 2011/12 has been broadly satisfactory. All targets for March and September 2011 have been met,” Honda said in a statement. “In particular, strict expenditure control has translated into a better fiscal position with the fiscal balance for 2011/12 now projected at 13.75 percent of gross domestic product (GDP).” The IMF mission has been in Lesotho since December 2 and was expected to end its mission today. “For 2011/12, the economy is expected to maintain robust growth, despite the flooding rains in early 2011 and high global food and oil prices,” Honda said. He urged the government of Lesotho to “continue fiscal consolidation to build up international reserves while protecting spending for poverty reduction and priority infrastructure”. “In addition to expenditure control, stepped-up efforts for strengthening domestic revenue mobilisation are called for. Any windfall revenues should be saved to build international reserves,” Honda said.
The IMF urged Lesotho to step up domestic revenue mobilisation with any windfall revenues being “saved to build international reserves” “Lesotho has successfully saved a large portion of its Southern African Customs Union (Sacu) revenues in 2006-09, which provided a critical cushion against the significant drop in the Sacu revenues in 2010/11 – 2011/2012,” the statement said. Lesotho’s revenue from Sacu has declined by 60 percent in recent years. Last year, Sacu only managed to give Lesotho M2 billion, down from M2.2 billion the previous year. Finance Minister Timothy Thahane however said the government will have to continue to watch its expenditure. “The global economic recovery has been very fragile. We may face another famine due to rains that have come later than the time they were expected. The high unemployment rate in European countries means that the capacity for them to import our products will be lessened,” Thahane said.

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