By Thoboloko Ntšonyane
MASERU – The Central Bank of Lesotho’s (CBL) Monetary Policy Committee (MPC) had issued a warning that Lesotho’s economy continues to underperform amid many local and international factors necessitating this.
This, the MPC Committee said on January 31 following its 99th sitting.
The Governor of the CBL Dr Maluke Letete attributed the underperformance among others to what he called the uncertainty of the policy, saying the government needs to device avenues that will stimulate the growth and also create the employment. This move, he noted will inspire confidence to both investors and the public alike.
He continued: “[The] economic activity continued to slow down for most economies. The global growth is expected to further weaken due to the ongoing Russia-Ukraine war and tighter global financial conditions. Inflation pressures in most economies remain high despite the slowdown observed in recent months. The domestic economy is expected to deteriorate further amid weaker global growth prospects and elevated inflation pressures.”
The Governor said the public debt was estimated at 61.7 per cent of Gross Domestic Product (GDP), the development which he said does not augur well for the country saying it has to go down.
“The Committee noted that global economic activity has been projected to slow down in 2023 as many economies continue to grapple with the cost-of-living crisis and high debt levels. In addition, the resurgence of COVID-19 in some countries and the escalating Russia-Ukraine war continue to weigh negatively on global economic recovery. According to the IMF, World Economic Outlook Update, the global economy is projected to slow down to 2.9 per cent in 2023.
“Most economies showed signs of deterioration in real GDP in the third quarter of 2022. Growth was hampered by elevated inflationary pressures that weighed negatively on aggregate demand. China’s economic performance improved in the third quarter, but lost momentum in the fourth quarter. The country continued to battle the effects of the ever-increasing COVID-19 infections following the lifting of a strict zero-COVID-19 policy. South Africa recorded higher than expected economic growth of 4.1 per cent, supported by increased agricultural productivity, among others.
“However, South Africa continues to face major headwinds due to prolonged load shedding affecting productivity in most industries,” said the Governor who also doubles as the MPC Committee Chairperson.
Dr Letete however showed that the government’s current account balanced improved during the third quarter of 2022, an improvement motivated by more exports. The exports, he said were boosted by the textile and clothing exports to both South and Africa and the United States.
He continue to highlight that there was a recorded increase in the diamonds sale.
To ward of these challenges, the MPC Chairperson said the members of the public should revise their spending habits and review how they budget.
The Governor said the Committee had projected that the economy might grow by 2.5 per cent to 3 per cent owing to the ongoing construction of the Polihali Dam as well as the implementation of the Millennium Challenge Compact (MCC) II.
Meanwhile, the Committee has revised downward the current Net International Reserves (NIR) target floor of US$650, approximately M11 billion to US$640, about M10.8 billion.
Also, the MPC has increased the CBL rate from 7.00 per cent per annum to 7.25 per cent per annum.
CBL warns economy continues to underperform
By Thoboloko Ntšonyane
MASERU – The Central Bank of Lesotho’s (CBL) Monetary Policy Committee (MPC) had issued a warning that Lesotho’s economy continues to underperform amid many local and international factors necessitating this.
This, the MPC Committee said on January 31 following its 99th sitting.
The Governor of the CBL Dr Maluke Letete attributed the underperformance among others to what he called the uncertainty of the policy, saying the government needs to device avenues that will stimulate the growth and also create the employment. This move, he noted will inspire confidence to both investors and the public alike.
He continued: “[The] economic activity continued to slow down for most economies. The global growth is expected to further weaken due to the ongoing Russia-Ukraine war and tighter global financial conditions. Inflation pressures in most economies remain high despite the slowdown observed in recent months. The domestic economy is expected to deteriorate further amid weaker global growth prospects and elevated inflation pressures.”
The Governor said the public debt was estimated at 61.7 per cent of Gross Domestic Product (GDP), the development which he said does not augur well for the country saying it has to go down.
“The Committee noted that global economic activity has been projected to slow down in 2023 as many economies continue to grapple with the cost-of-living crisis and high debt levels. In addition, the resurgence of COVID-19 in some countries and the escalating Russia-Ukraine war continue to weigh negatively on global economic recovery. According to the IMF, World Economic Outlook Update, the global economy is projected to slow down to 2.9 per cent in 2023.
“Most economies showed signs of deterioration in real GDP in the third quarter of 2022. Growth was hampered by elevated inflationary pressures that weighed negatively on aggregate demand. China’s economic performance improved in the third quarter, but lost momentum in the fourth quarter. The country continued to battle the effects of the ever-increasing COVID-19 infections following the lifting of a strict zero-COVID-19 policy. South Africa recorded higher than expected economic growth of 4.1 per cent, supported by increased agricultural productivity, among others.
“However, South Africa continues to face major headwinds due to prolonged load shedding affecting productivity in most industries,” said the Governor who also doubles as the MPC Committee Chairperson.
Dr Letete however showed that the government’s current account balanced improved during the third quarter of 2022, an improvement motivated by more exports. The exports, he said were boosted by the textile and clothing exports to both South and Africa and the United States.
He continue to highlight that there was a recorded increase in the diamonds sale.
To ward of these challenges, the MPC Chairperson said the members of the public should revise their spending habits and review how they budget.
The Governor said the Committee had projected that the economy might grow by 2.5 per cent to 3 per cent owing to the ongoing construction of the Polihali Dam as well as the implementation of the Millennium Challenge Compact (MCC) II.
Meanwhile, the Committee has revised downward the current Net International Reserves (NIR) target floor of US$650, approximately M11 billion to US$640, about M10.8 billion.
Also, the MPC has increased the CBL rate from 7.00 per cent per annum to 7.25 per cent per annum.