By Thoboloko Ntšonyane
MASERU – The Central Bank of Lesotho (CBL) has again announced that it will maintain the interest rate at 7.75% per annum. This was said during the publication of the Monetary Policy Committee (MPC) report following on Tuesday this week.
This was the outcome of the 109th MPC meeting of the Bank held on September 24. On July 23, its 108th meeting was held on July 23 and it resolved to keep its rate at 7.75%, and this says those who are servicing their loans with the private banks will not have their rates adjusted during this period until the change is made as the banks borrow from the CBL .
The CBL Governor who is also the MPC Chairperson Dr Maluke Letete said the Committee has resolved to lower the Net International Reserves (NIR) to US$750 million about M12.9 billion from US$760 approximately M13.1 billion. The Committee said this will ensure that Loti is pegged to the South African Rand.
Previously, the Committee’s report MPC highlighted that the CBL’s NIR increased by approximately $119.29 million about M2 billion between May 2024 and 18th of July 2024. This growth is said to be on account of the Southern African Customs Union (SACU) receipts and increased water royalties during the same period.
The Governor disclosed that the economy grew modestly in July 2024 following the contraction in June 2024. “This was driven by stronger economic activity in the construction, transport and services subsector, despite weak demand and subdued manufacturing.
“In the near term, growth is expected to improve as major projects, including the lowlands water projects, LHWP and horticulture component of the MCC-supported projects gain momentum. Domestic headline inflation eased to 6.0 per cent in August 2024 from 6.7 per cent in July,” reads the Committee’s statement in pertinent part. The MPC has attributed this to moderation in prices for education, transport and clothing footwear.
It however, noted that food prices rose reflecting higher demand relative to constrained supply. Despite recent appreciation, the weak exchange rate remains at risk to the inflation outlook, the MPC Chairperson has indicated.
He noted that the inflation rate is projected to average 5.5 per cent in 2025 and 5.5 per cent in 2026.
The Committee has forecasted the global economy to remain resilient in 2024 despite risks. The inflation is further projected to ease globally, according to the Committee’s report.
Dr Letete said the CBL’s rate at 7.75 per cent is in alignment with the prevailing domestic economic conditions and the broader regional monetary policy environment.
A 1.7% deficit experienced in May 2024 of the gross domestic product (GDP) was reportedly not worrisome.
During the previous reporting of the MPC’s 108th meeting, the Governor said the government should have a sustainable deficit which does not pose a problem as the government has got to spend in order for economic activity to take place.”The government should spend more, but in a manner that consolidates capital projects.”