An International Monetary Fund (IMF) mission led by Mr. Jiro Honda which was in Maseru from January 10 to 23 to conduct the fifth country review under the program supported by the Extended Credit Facility (ECF) has given the Southern African country a clean bill of health.
A statement issued by Mr Honda on Wednesday said the mission met Prime Minister Motsoahae Thomas Thabane and his cabinet, including Finance Minister Leketekete Ketso, Central Bank of Lesotho (CBL) Governor, Dr Retšelisitsoe Matlanyane, other senior government officials, as well representatives of the private sector and development partners.
He indicated that despite the drought in 2012, Lesotho has maintained robust economic growth, mainly driven by the mining and construction sectors.
Mr Honda praised what he called the strong response of Lesotho’s international partners with whom the government was able to address most immediate drought-related food costs.
He said the fiscal balances for 2012/13 are expected to record a surplus, further reducing pressures on the external balances, with international reserves reaching about four months of imports at the end of December 2012.
“Looking ahead, while Lesotho’s economic growth prospects are robust, downside risks are significant. The main risks arise from the uncertain global and regional economic outlook that could lower Southern African Customs Union (SACU) revenues and external demand for Lesotho’s key export items, diamonds and textiles,” he observed.
The team leader pointed out that in light of these risks and the need to safeguard the exchange rate peg, IMF was positive about the authorities’ intentions to continue their fiscal adjustments in 2013/14 with a view to rebuilding their international reserves buffer to the equivalent of five months of imports over the medium term.
“We support their continued commitment to fiscal adjustments, while protecting spending for poverty reduction and priority growth-promoting infrastructure. We also welcome ongoing efforts to improve public financial management, enhance tax administration, strengthen financial sector supervision and regulation, and promote private sector development… We support the authorities’ consideration for a civil service reform,” he said.
He pointed out that they expect to finalize the discussions on the policy framework for 2013/14, with a view to proposing for the IMF Executive Board’s consideration, the completion of the fifth review under the Extended Credit Facility (ECF) arrangement, which will allow the disbursement of about $8.7 million.
According to him, the three-year ECF arrangement of about $64.4 million was approved on June 2, 2010 while the Executive Board also approved an augmentation of the program, which has led to a total access of about $77.8 million.
Meanwhile, Mr Honda told the media in the capital, Maseru on Wednesday that mining and construction are sectors that played a role in maintaining a robust economic growth in Lesotho despite challenges that included drought experienced in 2012.
He was briefing the media about the outcomes of a fifth review mission conducted under the program supported by the ECF in Lesotho during the past two weeks.
IMF conducts assessment on the ECF program performance after every six month.
This was the fifth review mission since the program was launched in June 2010.
Source African Press Agency
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