MASERU — The International Monetary (IMF) head of mission in Lesotho, Jiro Honda, says the country’s economy has improved significantly under the support of the Extended Credit Facility (ECF).
The IMF is currently in Lesotho to undertake the final review of the three-year programme supported under the ECF.
Honda was speaking during a cocktail reception to celebrate the successful conclusion of the programme a fortnight ago.
He said in the three years that the EFC programme has been running Lesotho’s economy has made significant progress in restoring stability while sustaining growth.
“At the outset of the arrangement in 2010, Lesotho was hit by the fall in Southern African Customs Union (Sacu) revenues. There were significant uncertainties about its future prospects, and the fiscal balance was expected to run a deficit through 2014,” he said.
“Now, the fiscal balance has already improved, recording a surplus in 2012/2013, with international reserves reaching four months of imports.”
Honda added: “Furthermore, growth has been robust, with an estimated annual average of five and half percent over the last three years. This successful outcome has been achieved by the authorities’ significant efforts to restore stability, support from Lesotho’s international partners, and the improvements in Sacu revenues.”
He however said the country was still faced with challenges like achieving sustained growth and reducing poverty.
“These mainly arise from the uncertain global and regional economic outlook, which could lower Sacu revenues and external demand for Lesotho’s key export items: diamonds and textiles,” he said.
“In this light, we welcome the authorities’ fiscal policies to support macroeconomic stability and enhance growth, while protecting priority growth – promoting infrastructure and spending for poverty reduction.”
Honda added that the IMF also welcomes 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 of civil service reform. We welcome the authorities’ interest in a successor arrangement with the IMF and look forward to further policy dialogue with the authorities in the coming months to help achieve Lesotho’s development goals,” he said