{
  "title": "Setting Up Fiscal Rules in Lesotho: Kingdom of Lesotho",
  "publication": "Selected Issues Papers, October 14, 2025",
  "sourceUrl": "https://www.imf.org/en/publications/selected-issues-papers/issues/2025/10/14/setting-up-fiscal-rules-in-lesotho-kingdom-of-lesotho-571221",
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  "summary": "Lesotho’s fiscal policy has long been shaped by volatile SACU revenues and persistent expenditure pressures, calling for a more rules-based and forward-looking framework to ensure sustainability.",
  "sections": [
    {
      "heading": "Context and Rationale",
      "content": "- Lesotho’s fiscal policy has long been shaped by volatile SACU revenues and persistent expenditure pressures.\n- A more rules-based and forward-looking framework is needed to ensure sustainability, strengthen medium-term planning, anchor debt dynamics, and build resilience to shocks.\n- Recent efforts to formalize a fiscal rules framework offer an opportunity to address these vulnerabilities."
    },
    {
      "heading": "Proposed Fiscal Framework (core elements)",
      "content": "- Debt ceiling of 60 percent of GDP.\n- Debt anchor of 50 percent of GDP.\n- Structural deficit target of 3 percent of GDP.\n- Supportive operational rules:\n  - Operational expenditure rule.\n  - Wage-bill rule."
    },
    {
      "heading": "Savings (Stabilization) Fund",
      "content": "- Recommendation to set up a savings fund (stabilization fund).\n- The fund should be anchored on the fiscal rules.\n- Intended purposes:\n  - Stabilization against revenue volatility.\n  - Investment purposes."
    },
    {
      "heading": "Policy Objectives and Expected Benefits",
      "content": "- Anchor debt dynamics via explicit debt ceiling and debt anchor.\n- Improve fiscal discipline through a structural deficit target.\n- Mitigate the impact of SACU revenue volatility using a stabilization fund tied to the rules.\n- Strengthen medium-term planning and forward-looking fiscal management."
    },
    {
      "heading": "Keywords and Thematic Focus",
      "content": "- Expenditure, Fiscal policy, Fiscal rules, Fiscal stance, Public debt.\n- Emphasis on debt ceiling, debt sustainability, expenditure pressure, fiscal reaction function, operational rules, stabilization fund.\n- Geographic and institutional scope: Africa; Southern Africa; IMF country; IMF staff; Global.\n\nSetting Up Fiscal Rules in Lesotho: Kingdom of Lesotho — Qianqian Zhang and Motseki Khiba, October 14, 2025.\n\n---\n\n Content in this bundle\n\n- Sipea2025140\n  - Sipea2025140 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Sipea2025140 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/selected-issues-papers/issues/2025/10/14/setting-up-fiscal-rules-in-lesotho-kingdom-of-lesotho-571221"
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    "Authors: Qianqian Zhang, Motseki Khiba",
    "Published: October 14, 2025",
    "Series: Selected Issues Papers",
    "DOI: https://doi.org/10.5089/9798229026659.018",
    "Lesotho’s fiscal policy has long been shaped by volatile SACU revenues and persistent expenditure pressures.",
    "A more rules-based and forward-looking framework is needed to ensure sustainability, strengthen medium-term planning, anchor debt dynamics, and build resilience to shocks.",
    "Recent efforts to formalize a fiscal rules framework offer an opportunity to address these vulnerabilities.",
    "Debt ceiling of 60 percent of GDP.",
    "Debt anchor of 50 percent of GDP.",
    "Structural deficit target of 3 percent of GDP.",
    "Supportive operational rules:",
    "Recommendation to set up a savings fund (stabilization fund).",
    "The fund should be anchored on the fiscal rules.",
    "Intended purposes:",
    "Anchor debt dynamics via explicit debt ceiling and debt anchor.",
    "Improve fiscal discipline through a structural deficit target.",
    "Mitigate the impact of SACU revenue volatility using a stabilization fund tied to the rules.",
    "Strengthen medium-term planning and forward-looking fiscal management.",
    "Expenditure, Fiscal policy, Fiscal rules, Fiscal stance, Public debt.",
    "Emphasis on debt ceiling, debt sustainability, expenditure pressure, fiscal reaction function, operational rules, stabilization fund.",
    "Geographic and institutional scope: Africa; Southern Africa; IMF country; IMF staff; Global.",
    "**Sipea2025140**"
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