Press Release: IMF Executive Board Completes Second and Third Reviews Under Extended Credit Facility Arrangement for the Kingdom of Lesotho, and Approves Request for Augmentation of Access and US$13.42 Million Disbursement

IMF News, April 9, 2012

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Canonical URL: Press Release: IMF Executive Board Completes Second and Third Reviews Under Extended Credit Facility Arrangement for the Kingdom of Lesotho, and Approves Request for Augmentation of Access and US$13.42 Million Disbursement

The Executive Board completed the second and third reviews of Lesotho’s program under the Extended Credit Facility (ECF).
Approved augmentation of access equal to 25 percent of quota, leading to a total access of 145 percent of quota, an amount equivalent to SDR 50.605 million (about US$77.84 million).
Approved an immediate disbursement equivalent to SDR 20.085 million (US$30.89 million), bringing total disbursements under the arrangement to SDR 33.565 million (US$51.63).
The three-year ECF arrangement for the Kingdom of Lesotho in an amount of SDR 41.9 million was approved by the IMF’s Executive Board on June 2, 2010 (Press Release No. 10/224).

Lesotho’s economy has "performed well under the ECF-supported program, notwithstanding a sharp reduction in SACU revenues, devastating floods, and high international commodity prices."
The augmentation of access, supplemented by donor assistance, is intended to support the authorities’ reform agenda and cushion the impact of shocks on the balance of payments.

Maintain the exchange rate peg, with the medium-term program appropriately focusing on fiscal adjustments to rebuild international reserves.
Adopt a prudent fiscal stance for 2012/13, emphasizing:
- Curbing recurrent expenditures while protecting social spending.
- Enhancing the efficiency of spending through improvements in public financial management and the quality of capital spending.
- Strengthening tax administration to help achieve medium-term fiscal targets.
Accelerate structural reforms to support private sector-led growth and economic diversification, aimed at:
- Improving the business climate.
- Boosting external competitiveness.
Strengthen the financial sector and facilitate financial deepening through planned regulatory reforms, including:
- Adopting regulations for the recently enacted Financial Institutions Act.
- Reinforcing the supervisory role of the central bank.
- Broadening access to financial services, especially in rural areas.

The augmentation of access under the ECF-supported program, together with donor assistance, will further support the authorities’ reform agenda and cushion balance-of-payments shocks.
The approved immediate disbursement increases available financing to support the authorities’ implementation of the recommended fiscal and structural measures.

Press Release No.12/126 — April 9, 2012