Bereng Mpaki

LESOTHO’S economic performance remained sluggish during the first quarter of 2018 largely as a result of poor performances by the secondary and tertiary sectors.

This was said by the Central Bank of Lesotho (CBL) in its recent monetary statement. The statement was released on Wednesday by the CBL’s Monetary Policy Committee (MPC).

The MPC periodically sits to review international, regional and domestic economic developments and financial markets’ to determine the adequacy of monetary targets needed to maintain macroeconomic stability in the country.

The MPC also revealed that there was a steady decline in the number of Basotho employed in South African mines- a development which compounded the gloomy economic situation.

The decline in the number of Basotho working in South African mines will not only impact negatively on the remittances to Lesotho but also exacerbate the high unemployment Lesotho is already experiencing.

“Lesotho’s economic performance is estimated to remain sluggish during the first quarter of 2018 following a contraction in 2017,” the MPC said in its statement.

“Labour market developments indicate a persistent downward trend in the number of Basotho employed in the South African mining industry.

“The Committee noted that despite positive global outlook, the domestic economy continued to face challenges that may hamper economic growth prospects in the medium-term. In this context, the MPC will continue to closely monitor developments that have a direct bearing on the NIR level.”

During that Wednesday sitting, the MPC increased the Net International Reserves (NIR) target floor from US$830 million to US$870 million as part of efforts to maintain the country’s macroeconomic stability.

The MPC also reduced the CBL rate from 6.75 per cent to 6.50 per cent per annum to bring it in line with that of South Africa.

The bank however, indicated that there was a silver lining in that the employment levels in the government and Lesotho National Development Corporation (LNDC) assisted companies had increased slightly during the first quarter of 2018.

It did not however, give figures of the increase.

There were more positive news in that the annual consumer inflation rate continued to decelerate during the first quarter of 2018. The annual inflation rate declined to 3.8 per cent in April 2018 from 4.8 per cent in March this year.

The deceleration was driven mainly by the food and non-alcoholic beverages component.

The MPC further stated without giving figures that the housing and energy inflation also slowed down.