By: Lebohang Maluke

Maseru – Monetary Policy Committee statement breaks on the latest global, regional, and domestic economic developments and financial markets at its 107th meeting.

After the International Monetary Fund (IMF), World Economic Outlook on April 2024, the Committee shows interest in the global economic forecast.

In both 2024 and 2025, it is estimated that global economy will grow by 3.2% which will offset a moderate slowdown in emerging markets and developing economies.

Increased commodity prices, weather shocks, high interest rates, high public debt level, and China’s enduring property sector shuts downturn.

In April 2024, inflation dropped in selected economies except for China. The main falling prices are food and forms of energy except crude oil in advanced economies. China’s rising inflation rate was booted by stronger domestic demand.

The decline of inflation rate in South Africa was reflected in food prices through improved supplies and moderate prices yet, most central banks left policy rates unchanged except for Japan, which increased its policy rate.

Domestic declines from 7.4 to 7.1 percent in March. The impact of lowering costs related to tax on building materials, alcohol, and tobacco that were introduced in March 2024 led to a fall in the inflation rate.

Food, energy, restaurants, and hotels fall in the inflation rate. Weather conditions in Southern Africa negatively affected food prices, weakening exchange, and strong global demand for oil results in increased fossil fuel pricing.

Weak consumer demand slows down the manufacturing and production sub-sector. In the first quarter of 2024, domestic economic activity inflation declined, however, the financial sector saw moderate growth. Over the medium – term at an average of 2.0% Lesotho’s economy is expected to grow.

There is an increment comparison to the previous moderate, in the first quarter of 2024 broad money led to an increment. Domestic private sector and household credit increase. Broad money supply increase moderating due to net foreign assets falling due to lesser placement of assets by commercial banks abroad.

Due to receipts of the rand monetary compensation, high water debt as a percent of GDP fell to 57.4 percent.

The level of foreign reserves increased in the quarter of 2023 from M15.04 billion to 15.20 billion in the first quarter of 2024.

Net International Reserves (NIR) is to maintain a one-to-one exchange rate peg between the Loti and the Rand and also maintain the CBL rate at 7.75 percent per annum.

Dr. Maluke Letete emphasizes that the economy of Lesotho fell compared to the previous three months. Entrepreneurs and society loans from the banks increased compared to the previous committee meeting.

The Committee continues to dedicate maintenance of financial stability. Analysis balances caution and optimism, affirming its confidence in the economic outlook while maintaining a watchful eye on the potential risks.

With this statement investors and market participants can move forward with renewed certainty and security, knowing that the central bank has their best interest in mind.