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Books and Analytical Papers > IMF Staff Country Reports

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  • Type: Journal Issue x
  • Lesotho, Kingdom of x
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Cover IMF Staff Country Reports
Kingdom of Lesotho: 2024 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Kingdom of Lesotho
International Monetary Fund. African Dept.
The 2024 Article IV Consultation discusses that Lesotho’s gross domestic product growth has improved modestly, picking up to 2.2 percent in the fiscal year ending in March 2024. Inflation increased in the second half of 2023, peaking at 8.2 percent in January 2024. However, upward pressures have eased, and inflation has since fallen to 6.5 percent in June. The outlook for Lesotho’s fiscal and external balances has improved significantly owing to windfall transfers from the Southern African Customs Union and renegotiated water royalties. Key recommendations include swiftly establishing a well-governed savings framework (stabilization fund) to ensure that additional revenues are saved wisely and spent strategically, in line with the authorities’ national development goals. To this end, the authorities are encouraged to prioritize high-quality public investment, strengthen internal controls to ensure transparency and accountability, and address governance and corruption vulnerabilities. Accompanying recommendations include: enhancing public financial management, improving the business environment, and increasing financial inclusion.
Keywords:
growth outlook; Act amendment; revenue services Lesotho; headline inflation; quarterly NA; tax administration bill; bridge policy coordination gap; Debt sustainability analysis; Africa; Southern Africa; Global
Cover IMF Staff Country Reports
Kingdom of Lesotho: Selected Issues
International Monetary Fund. African Dept.
This Selected Issues paper delves into few applications of machine learning (ML), with a particular application to economic forecasts in Lesotho. Amid delayed and often revised gross domestic product data, this paper explores the potential of ML to provide real-time insights into growth and inflation trends, crucial for informed policymaking. By leveraging nontraditional data and employing a variety of ML models, the paper presents a comprehensive analysis of current economic activity, evaluates the accuracy of standard statistical measures, and forecasts future inflation trends. The findings underscore the efficacy of ML in reducing prediction errors and highlight the significant role of alternative data in circumventing the limitations posed by traditional economic indicators. This paper contributes to the broader debate on the application of advanced computational techniques in economic forecasting, offering valuable insights for policymakers in Lesotho and similar countries grappling with data constraints and the need for timely economic analysis.
Keywords:
E. inflation forecasting; GDP Nowcasting result; D. GDP evaluation; C. GDP Nowcasting; ensemble Nowcasting model; Machine learning; Inflation; Africa; Global
Cover IMF Staff Country Reports
Kingdom of Lesotho: 2023 Article IV Consultation-Press Release; and Staff Report
International Monetary Fund. African Dept.
The 2023 Article IV Consultation discusses that Lesotho’s economy continues to face a number of challenges in the wake of the pandemic. Climate shocks, delays to infrastructure projects, high food and fuel prices, declining diamond prices, layoffs in the textiles sector, and weak regional and external demand are weighing on activity. The government is prioritizing fiscal consolidation on the back of windfall transfers from the Southern African Customs Union, which have helped alleviate near-term pressures on financing and reserves. Alongside, broad-ranging structural reforms will be vital for the economy to transition to durable, resilient, inclusive, job-rich, and sustainable private sector-led growth. The IMF Staff strongly encourages efforts to improve the business environment, strengthen financial stability, and enhance business lending. The Staff strongly encourages the authorities to continue their efforts to increase capacity, improve data quality, and coordinate closely on macroeconomic policies. High data quality and information sharing are critical for policymaking—from measuring economic performance to forecasting.
Keywords:
exports threshold; CBL approval; IMF CD; SACU windfall; government finance; policy rate change; Debt sustainability analysis; Africa; Global; Southern Africa
Cover IMF Staff Country Reports
Kingdom of Lesotho: Selected Issues
International Monetary Fund. African Dept.
This Selected Issues paper focuses on decomposing the public-private sector wage differential in Lesotho. Lesotho’s public wage bill is significantly higher than in other countries in the region. This paper takes a closer look at the civil service wage bill and examines public sector wage premium. It provides an overview of public sector employment and compensation, estimates, explores drivers of the wage premium between the public and private sectors, and conducts a decomposition of the public-private wage gap. The upward inertia in the public wage bill has been gradually crowding out all other government spending. Containing the wage bill is essential to ensure fiscal sustainability and improve income distribution. The upward inertia in the public wage bill has been gradually crowding out all other government spending. Containing the wage bill is essential to ensure fiscal sustainability and improve income distribution. Public sector employment should be reduced and managed using a combination of essential hiring, natural attrition, and staff redeployment.
Keywords:
wage distribution; wage premium; D. policy implication; private sector development; wage bill; Wages; Public sector wages; Government wage bill; Public sector; Civil service; Africa; Sub-Saharan Africa; Southern Africa; Global
Cover IMF Staff Country Reports
Kingdom of Lesotho: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Kingdom of Lesotho
International Monetary Fund. African Dept.
Lesotho has been simultaneously hit by the pandemic, declining transfers from the Southern African Customs Union (SACU), and the impact of the war in Ukraine. The pandemic exacerbated the impact of sluggish regional performance, climate shocks, and longstanding structural issues such as regulation, governance, political stability, financial inclusion, and diversification. Public expenditure has continued to increase, such that the decline in external transfers precipitated significant financing pressures and growing domestic arrears. With limited inflows to the private sector, the resulting public sector-driven external imbalances have continued to put pressure on international reserves needed to maintain the exchange rate peg.
Keywords:
CBL approval; Lesotho economy; private sector; government finance; liability positions vis-à-vis nonresident; exports threshold; IMF staff calculation; Africa; Southern Africa; Global
Cover IMF Staff Country Reports
Kingdom of Lesotho: Selected Issues
International Monetary Fund. African Dept.
Selected Issues
Keywords:
SACU transfer; tertiary education loan bursary scheme; social spending; management strategy; consumption share; Fiscal rules; Capital spending; Africa; Global; Southern Africa; Sub-Saharan Africa; East Asia