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Sofonea cuts budget by over M2 billion

Bereng Mpaki

FINANCE minister Thabo Sofonea has slashed the 2020/2021 financial year budget estimates by over M2 billion after factoring in the negative impact of Covid-19 pandemic on tax revenue collection.

Mr Sofonea on Thursday tabled amendments to the 2020/2021 budget estimates before the National Assembly, which duly approved them. Individual ministries are now presenting their budgets leading to the drafting of an appropriation bill which contains all the approved budget estimates.

So far, only the Ministry of Agriculture and Food Security has presented its budget to Parliament. The ministry wants M278 million with at least M155 million going towards salaries. Parliament has approved the ministry’s budget.

Mr Sofonea’s revisions included the reduction of the projected expenditure for the Ministry of Finance by M2 billion; reduction of the projected revenue for the Ministry of Mining by M215.6 million; and the reduction of the projected revenue for the Ministry of Home Affairs by M511 030.

The Ministry of Finance has however, revised upwards the revenue expected to be collected by the Ministry of Health by M20 million through the cannabis industry.

Mr Sofonea said the expected revenue collections were revised downwards due to the negative impact of the Covid-19 pandemic on economic performance.

“I rise to move that head 002 Ministry of Finance be decreased by M2.026 billion under the expenditure estimates,” Mr Sofonea said.

“The reason for this reduction is that the revenue expected to be collected this financial year will be affected given the Covid-19 lockdown which has reduced economic activity hence tax revenue collection.”

He said remittance of taxes such as value added tax were likely to be delayed.

“This will affect revenue collection, and according to our projections, we are unlikely to collect about M2.026 billion given the rate at which collections have been affected.”

On the cutting the revenue for the Ministry of Mining, Mr Sofonea said Covid-19 had negatively affected the global trading of diamonds, and some local diamond mines have been unable to sell their diamonds.

On the Home Affairs revenue reduction, he said the ministry would collect much lower revenue given that the public no longer required passports for use as the only acceptable identity document for official use.

Instead, the public can now use their identity cards which they can secure from the Home Affairs offices for free. The only related cost is that of getting a birth certificate which costs M4.50. On the other hand, a 32-page passport costs M130 while a 64-page passport costs M250.

Mr Sofonea said the Ministry of Health would collect more because the country’s growing cannabis industry which had been skipped in the initial budget.

“The reason for this M20 million increase is that the tax revenue generation under the cannabis industry was omitted during the initial budgeting process,” Mr Sofonea said.

The Minister of Forestry, Range and Soil Conservation, Motlohi Maliehe, said it was imperative for the government to employ austerity measures if it is to cover its recurrent expenses like salaries.

“The house should be aware that this decision has been made after the Lesotho Revenue Authority (LRA) advised the government about the difficulties encountered in collecting revenue as a result of the Covid-19 pandemic. Lesotho has not been spared as evidenced by the continued non operation of some ports of entry.

“The minister has realised that if he does not take this action, the public may later demand answers as to why he has failed to collect the revenue that he had set out to collect initially.

“This therefore, means that we must employ austerity measures in order to stretch the little finances that we will collect,” Mr Maliehe said.

Alliance of Democrats legislator Mokhele Moletsane said the government must come up with alternative revenue generation measures to close its revenue shortfall.

“It is going to be an unenviable task of stabilising the country’s economic affairs. We expect the minister to come back to report to the house how he intends to close the financial gap left by the reductions.”

While the minister of finance did not explain which projects are to be affected by the budget reduction, the Deputy Minister of Foreign Affairs, Machesetsa Mofomobe, said the public would need to be sensitised about the budget cuts if it will affect capital projects.

“We all bear witness that Covid-19 has negatively affected the country’s economy like other countries of the world.  If the capital budget is to be reduced, then it is clear that the developmental projects that the citizens were looking forward to in this financial year will be heavily affected.

“For that reason, the reduction of the budget by over M2 billion is a serious matter which must be well communicated so that the people can appreciate its implications,” Mr Mofomobe said.

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