Ultimate magazine theme for WordPress.

Lesotho gets US$110m boost

Mpeshe Selebalo


MASERU — The World Bank has approved a US$110 million loan to Lesotho to assist the country deal with the effects of the global financial crisis.

The funds will be used to boost Lesotho’s economic competitiveness, improve public sector efficiency to combat HIV and Aids and improve service delivery after the 2008 financial crunch.

“This new strategy builds on a solid partnership between Lesotho and the World Bank,” said Ruth Kagia, the bank’s country director for Lesotho.

“It recognises that Lesotho is facing significant challenges due to the global financial crisis and a shrinking revenue base, and it aims to help Lesotho sustain the economic growth momentum and improve human development indicators.”

The World Bank said the funds were approved under the new Country Assistance Strategy which will be rolled out over a period of three years.

The strategy is expected to commence in 2011 and will run until 2014, according to the bank.

Lesotho has enjoyed political and macroeconomic stability and benefited from reforms that enabled the economy to achieve a respectable growth rate of 3.4 percent between 2004 and 2008.

The World Bank said the onset of the global financial crisis and a sharp decline in revenues from the Southern African Customs Union (Sacu) were threatening to worsen macroeconomic risks to the economy.

“The onset of the global financial crisis and a sharp projected decline from the Sacu revenues which account for over 60 percent of the government’s revenue base are threatening to exacerbate macroeconomic risk to the economy,” the bank said.

“Furthermore, loss of textile markets due to the slowdown in the US and decline in diamond trade are posing new challenges.”

Lesotho’s share from the Sacu revenue pool has been on a downward slide due to a sharp decrease of imports from the Sacu region.

The country’s revenue for 2010/2011 has been projected at M2.2 billion, a 44 percent decline from the M4.9 million recorded in 2009/2010.

“The new country partnership strategy is a forward-looking document that builds on Lesotho’s past successes and positions the economy for achieving greater levels of growth and benefiting from the global recovery,” said Larisa Leschchenko and Husam Abudagga, World Bank co-task team leaders who led the development of the strategy.

“In developing the strategy, we consulted widely and look forward to successful implementation for the benefit of the Basotho people.”

In an interview with the Sunday Express on Friday, the chief executive in the Ministry of Finance’s department of economic planning, Motena Tsolo, said the funds will be used for projects aimed at reviving the economy.

“The specific projects have still not been identified but we are now looking into developing projects which will be implemented from next year,” she said.

“The main idea for initiating such projects is to drive economic growth and improve human development through education and health.”

Tsolo added that the projects will be initiated around June next year in line with the World Bank’s financial year which begins in June.

According to the African Economic Outlook report released this year, Lesotho’s gross domestic product (GDP) growth is projected at 2.3 percent — an improvement from the 1.1 percent growth recorded in 2009.

Projections indicate that GDP growth will pick up further to 3.3 percent in 2011.

The sharp decline in diamond prices that was experienced last year and the falling orders in the textiles sector have been seen as the main causes of last year’s low GDP growth.

Comments are closed.