The much-anticipated 2025/26 budget speech delivered by Finance Minister Retšelisitsoe Matlanyane on Wednesday was expected to address critical economic challenges and provide clarity on pressing issues such as the United States’ decision to pause external funding.
Instead, the speech left many questions unanswered and reinforced concerns about the government’s ability to navigate the nation through a difficult economic landscape.
The increase in grants for people with disabilities is a welcome intervention that acknowledges the vulnerable populations that rely on these funds for survival.
However, given the rising cost of living and inflationary pressures, the increments may not be enough to significantly improve the lives of recipients. Many had hoped for a more substantial increase that would better align with the escalating cost of basic goods and services.
Without further measures to cushion these groups against economic shocks, the relief may be short-lived.
One of the most talked-about aspects of the budget was the proposed 35 percent Pay-As-You-Earn (PAYE) tax rate for high-income earners, which the Minister later admitted was an error, the actual rate remains unchanged at 30 percent.
While this clarification is important, it raises concerns about the accuracy of government financial planning. If such an error could slip into a national budget speech, how many other miscalculations or oversights exist within the broader fiscal framework?
The 2 percent salary increment for public servants is unlikely to make a meaningful impact, particularly in a high-inflation environment. For many, this adjustment feels more symbolic than substantive.
Public sector workers, who have long decried stagnant wages amid the increasing cost of living, will see minimal real gains. This decision fails to address the broader issue of low wages and declining purchasing power, which continue to dampen economic activity and consumer confidence.
Perhaps the most alarming aspect of the budget speech was the government’s silence on the United States’ decision to pause external funding. This decision has far-reaching implications, particularly for the health sector, which heavily relies on donor support.
Civil society organisations and health professionals had hoped the government would present a plan to mitigate the impact of this funding gap, yet there was no clear strategy outlined. The failure to address this critical issue leaves the nation vulnerable and uncertain about the future of essential health services.
With youth unemployment at crisis levels, the budget should have prioritised tangible solutions for job creation. While general economic growth plans were mentioned, there was little in terms of concrete programs to directly tackle the issue of joblessness among young people.
The government had an opportunity to introduce new policies or funding mechanisms to stimulate youth employment, entrepreneurship, and skills development, but once again, it fell short.
Overall, the 2025/26 budget lacks the bold reforms needed to instill confidence in the economy. While certain measures, such as social grants and maintaining the PAYE rate at 30 percent, provide some relief, the lack of decisive action on key issues such as donor funding and unemployment casts a shadow over the country’s economic prospects.
As Lesotho faces an uncertain financial future, the government must do more to assure its people that it has a viable plan to safeguard livelihoods and drive sustainable growth.
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