## IMF Staff Completes Virtual Mission to Lesotho

_IMF News, October 15, 2021_

## Source details

**Canonical URL:** [IMF Staff Completes Virtual Mission to Lesotho](https://www.imf.org/en/news/articles/2021/10/15/pr21300-lesotho-imf-staff-completes-virtual-mission-to-lesotho)

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## Bibliographic details
- Published: October 15, 2021

---

### Mission overview
- Press Release No. 21/300
- Mission led by Mr. Aqib Aslam.
- Virtual missions conducted most recently from September 7 to October 15, 2021.
- Purpose: discuss the authorities’ economic and financial program and their request for IMF financial support.
- End-of-mission statement conveys preliminary findings of IMF staff; views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

### Economic context and key findings
- Lesotho has been struggling with the fallout from the pandemic and a sharp decline in revenues from the Southern African Customs Union (SACU).
- The economy has been in recession since 2017.
- Public expenditures have been increasing while SACU revenues, which had earlier been buoyant, declined and are highly volatile.
- Fiscal and external imbalances, if left unaddressed, would continue to put pressure on international reserves and lead to government payment arrears.

### Policy discussions and recommended reforms
- Program objectives under discussion:
  - Support a durable post-pandemic recovery.
  - Restore fiscal sustainability.
  - Strengthen public financial management (PFM).
  - Ensure protection of the most vulnerable.
- Structural reforms emphasized:
  - Strengthening governance.
  - Fostering private sector investment to spur inclusive growth and employment over the medium term.
- Fiscal policy focus and specific measures discussed:
  - Contain the fiscal deficit to a sustainable and fully financed level; adjustment should be focused on expenditure measures.
  - Protect and boost poverty-reducing social spending.
  - Address the public sector wage bill, noted as one of the largest in the world compared to the size of the economy.
  - Save on public sector and official allowances.
  - Better target education loans.
  - Streamline the capital budget.
  - Initiate gender-responsive budgeting.
  - Modernize tax policy and improve domestic revenue mobilization.
  - Address long-standing PFM issues to ensure reliable fiscal data, integrity of government systems, and sound use of public resources.
- Financial sector and inclusion measures:
  - Broaden financial access and inclusion.
  - Strengthen financial supervision.
  - Modernize legal frameworks for bank lending, business rescue, and restructuring.
  - Digitalize payment systems.

### Progress and next steps
- The authorities and the mission team made significant progress in discussions on policies that could be supported by the IMF under a financial arrangement.
- Significant progress was made during the visit, and discussions will continue in the coming weeks.
- If agreement is reached on policy measures in support of the reform program, an arrangement to support Lesotho’s economic program would be proposed for the IMF Executive Board's consideration.

### Engagements and stakeholders met
- Meetings included: Prime Minister Majoro; Minister of Finance Sophonea; Central Bank Governor Matlanyane; other senior government officials.
- The team also met with representatives of the diplomatic community, private sector, civil society, and multilateral development partners.
- IMF Communications Department media relations contact: PRESS OFFICER Andrew Kanyegirire; Phone: +1 202 623-7100; Email: MEDIA@IMF.org; @IMFSpokesperson

*Source: Press Release No. 21/300, October 15, 2021.*

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## References

- [Kingdom of Lesotho and the IMF](http://www.imf.org/external/country/LSO/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2021/10/15/pr21300-lesotho-imf-staff-completes-virtual-mission-to-lesotho_