Lesotho must adopt policies that enhance livelihoods: Ketso

By Letuka Chafotsa

MASERU — Lesotho needs to shift focus to policies that will develop society rather than only those aimed at celebrating figures of economic growth, the Minister of Finance Dr Leketekete Ketso said this week.

Speaking at National Economic Confer­ence held at a local hotel, Ketso said economic growth should translate into tangible indica­tors like improved standard of living through increased income.
He said economic growth should “create jobs and opportunities for poor people to sup­port their families and build more stable fu­tures,” Ketso said.

Ketso said many developing countries face particular challenges that make it difficult for them to stimulate and sustain economic growth.

“These challenges include weak institu­tions, high unemployment, poor infrastruc­ture, lack of access to financial services and unsuitable laws and regulations,” Ketso said.

Speaking at same event, the Minister of Development Planning Dr Moeketsi Majoro said: “Recently emerging markets by the acronym MINT (Mexico, Indonesia, Nigeria and Turkey) give a glimmer of hope to Afri­can countries since within MINT there is an African state Nigeria.”
This year global economic experts had ro­bustly shown trust in investing in MINT countries.
“First it was the Brics (Brazil, Russia, India, China and South Africa). Then for a while the Civets (Colombia, Indonesia, Viet­nam, Egypt, Turkey and South Africa) were in vogue. Now the MINT are the ones to watch,” Majoro said.

Majoro said MINT are emerging market pacesetters so Lesotho should be in a posi­tion to take advance of the African country within MINT through developing its textile products.
He added: “The chances are you probably heard that MINT is no longer just a pep­permint sweet, it is now also an investment acronym which in the next decade or two could prove extremely profitable for inves­tors”.

Meanwhile, the global recovery is strength­ening but much work remains to be done, ac­cording to the IMF’s updated World Econom­ic Outlook report, released earlier this week.
The IMF expects global growth to increase from three percent in 2013 to 3.7 percent in 2014 (previously 3.6 percent).

Advanced economies are expected to pick up from 1.3 percent in 2013 to 2.2 percent in 2014 while growth in emerging and develop­ing economies is set to climb from four per­cent to five percent.

“The basic reason behind the stronger re­covery is that the brakes to the recovery are progressively being loosened,” says IMF chief economist Olivier Blanchard.

“The drag from fiscal consolidation is di­minishing. The financial system is slowly healing. Uncertainty is decreasing.” How­ever, it is still “a weak and uneven recovery”, he warns.
A key global challenge will be adjusting to US monetary policy normalisation.

Developing economies with weak macro­economic frameworks like Lesotho should be most affected and will require stronger do­mestic policies to reduce this risk.
While developing economies face tighter financial conditions as a result, the IMF thinks this will be countered by faster devel­oped world growth.

The IMF has cut SA’s 2014 growth outlook by 0,1 percent to 2.8 percent.
In emerging markets and developing econ­omies, recent developments highlight the need to manage the risks of potential capital flow reversals.

Economies with domestic weaknesses and partly related external current account defi­cits appear particularly exposed.

Exchange rates should be allowed to de­preciate in response to deteriorating external funding conditions.

When there are constraints on exchange rate adjustment — because of balance sheet mismatches and other financial fragilities or large pass-through to inflation because of monetary policy frameworks that lack trans­parency or consistency in their implementa­tion — policymakers might need to consider a combination of tightening macroeconomic policies and stronger regulatory and supervi­sory policy efforts.

In China, the recent rebound highlights that investment remains the key driver in growth dynamics.
More progress is required on rebalancing domestic demand from investment to con­sumption to effectively contain the risks to growth and financial stability from overin­vestment. ­

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