By: Thoboloko Ntšonyane
MASERU- The Central Bank of Lesotho (CBL) has during its 105th Monetary Policy Committee (MPC) meeting resolved to increase the net international reserves (NIR) target to US$750 million (M14.1 billion) from US$710 (13.4 billion).
Dr Maluke Letete, the Governor of the Central Bank of Lesotho (CBL) said this upward adjustment is so that Loti remains pegged to the South African Rand.
The Committee has further maintained the CBL rate at 7.75 per cent per annum.
Also, the Chairperson of the MPC, Dr Letete highlighted that the domestic economic activity that was estimated to have contracted in November last year, following a stronger growth in the preceding month.
“Headline inflation increased to 7.2 per cent in December 2023 from 6.8 per cent in November 2023. Domestic contributors to the high inflation were food, energy and clothing prices, while the external drivers were the weak exchange rate and renewed geopolitical tensions.
“This continued weaker loti, volatile commodity prices and the climate-related events present risks to the medium-term inflation outlook. Broad money supply increased in November 2023. This growth was supported by the increase in net domestic assets as well as increased private credit, largely underpinned by credit extended to households. However the rise was moderated by the fall in net foreign assets,” said Dr Letete.
The Committee continued:
“Government operations registered a deficit equivalent to 5.6 per cent to GDP (gross domestic product) marginally declined by 0.3 per cent.”
Taking stock of the global economies, MPC noted that inflation rates increased in some advanced and emerging market economies while they declined in others in December 2023.
This rise of inflation was attributable to food prices hike as well as alcoholic beverages and tobacco.
CBL Governor showed that economic activity in selected advanced markets economies was generally expected to improve in the fourth quarter of 2023. The neighbouring South Africa’s economic activity was expected to be supported by rebounds in the mining and manufacturing sectors, despite the country’s infrastructure and logistical hurdles.
“The Committee will continue to closely assess the global economic developments and their impact on the domestic economy, especially the NIR and respond accordingly,” said the Chairperson of the MPC.