Seabata Mahao
Lesotho’s economy contracted by 1.5 percent in the third quarter of 2024, following a 1.8 percent expansion in the preceding quarter, the Central Bank of Lesotho (CBL) reported this week.
CBL Governor, Dr Maluke Letete, attributed the decline to a sharp contraction in domestic demand alongside weaker performance in the manufacturing and construction sectors.
Despite this setback, Letete noted that medium-term growth is projected to stabilize, albeit unevenly, at 2.4 percent in 2024 and 2.1 percent in 2025.
Addressing a media briefing on the apex bank’s monetary policy committee (MPC) decisions, he further indicated that inflation eased in October 2024.
“This mainly reflected declining prices of fuel and food. The recent appreciation of the rand has also contributed to the decline in the inflation rate. However, relatively high and elevated food prices are expected to remain a risk to the inflation outlook in the near term,” Letete explained.
Meanwhile, the Minister of Finance and Development Planning, Dr Retšelisitsoe Matlanyane, further clarified the gravity of the country’s ongoing economic struggles.
“…on the other hand, the mining sector has struggled due to unfavourable prices of rough diamonds in the global markets, while the textile industry continues to grapple with reduced demand, driven largely by shifts in U.S. consumer spending patterns.
“These underperforming sectors, which are critical to our economy, highlight the pressing need for targeted interventions to bolster their competitiveness and resilience against shocks. Their contraction underscores the fragility of our growth.”
Speaking on the Mid-Term Budget performance, Matlanyane disclosed that the government has collected M13.1 billion in revenue, reaching 50 percent of the annual projected target of M24.1 billion halfway before the end of the fiscal year.
“We have reached a significant milestone in our financial journey – a journey marked by resilience, determination, and collective effort. Today, I am pleased to report that we have successfully collected M13.1 billion in total revenue.
“This figure represents 50 percent of our ambitious target of M24.1 billion for this fiscal year and is composed of M5.8 billion from the Southern African Customs Union (SACU) receipts, M4.6 billion from domestic taxes, and M2.7 billion from non-tax revenue streams.”
She warned however, about the country’s overreliance on the unstable SACU revenue to finance its budget.
“It is important to note that SACU revenue continues to overshadow our domestic tax revenue portraying the persisting dependence on this volatile source. This signifies our continuing vulnerability to global economic developments,” Matlanyane said.
