IMF Staff Country Reports

The 2024 Article IV Consultation discusses that Lesotho’s gross domestic product growth has improved modestly, picking up to 2.2 percent in the fiscal year ending in March 2024. Inflation increased in the second half of 2023, peaking at 8.2 percent in January 2024. However, upward pressures have eased, and inflation has since fallen to 6.5 percent in June. The outlook for Lesotho’s fiscal and external balances has improved significantly owing to windfall transfers from the Southern African Customs Union and renegotiated water royalties. Key recommendations include swiftly establishing a well-governed savings framework (stabilization fund) to ensure that additional revenues are saved wisely and spent strategically, in line with the authorities’ national development goals. To this end, the authorities are encouraged to prioritize high-quality public investment, strengthen internal controls to ensure transparency and accountability, and address governance and corruption vulnerabilities. Accompanying recommendations include: enhancing public financial management, improving the business environment, and increasing financial inclusion.