Front Matter Page
© 2003 International Monetary Fund
June 2003
IMF Country Report No. 03/169
Lesotho: Fourth Review Under the Poverty Reduction and Growth Facility Arrangement and Request for Waiver of Performance Criteria—Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Lesotho
In the context of the fourth review under the Poverty Reduction and Growth Facility arrangement and request for waiver of performance criteria, the following documents have been released and are included in this package:
the staff report for the fourth review under the Poverty Reduction and Growth Facility arrangement and request for waiver of performance criteria, prepared by a staff team of the IMF, following discussions that ended on April 13, 2003, with the officials of Lesotho on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on May 22, 2003. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.
a Press Release summarizing the views of the Executive Board as expressed during its June 16, 2003 discussion of the staff report that completed the request and/or review.
a statement by the Executive Director for Lesotho.
The document(s) listed below have been or will be separately released.
Joint Staff Assessment of the Poverty Reduction Strategy Paper Progress Report
Letter of Intent sent to the IMF by the authorities of Lesotho*
Memorandum of Economic and Financial Policies by the authorities of Lesotho*
Poverty Reduction Strategy Paper Progress Report
Technical Memorandum of Understanding*
*May also be included in Staff Report
The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.
To assist the IMF in evaluating the publication policy, reader comments are invited and may be sent by e-mail to publicationpolicy@imf.org.
Copies of this report are available to the public from
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International Monetary Fund
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Front Matter Page
INTERNATIONAL MONETARY FUND
LESOTHO
Fourth Review Under the Poverty Reduction and Growth Facility Arrangement and Request for Waiver of Performance Criteria
Prepared by the African Department
(In consultation with the Legal, Policy Development and Review, Statistics, and Finance Departments)
Approved by Michael Nowak and Liam P. Ebrill
May 22, 2003
The Executive Board approved a three-year arrangement under the Poverty Reduction and Growth Facility (PRGF) for SDR 24.5 million (70 percent of quota) on March 9, 2001. The third and fourth disbursements of SDR 3.5 million each took place on March 26, 2002 and September 30, 2002, respectively.
Discussions for the fourth review under the PRGF were held in Maseru during December, 4–17, 2002 and February 17–21, 2003, and in Washington during April 9–13. Participants included Minister of Finance and Development Planning, T. Thahane; Governor of the Central Bank of Lesotho, E. M. Matekane; and officials of the government and central bank, and commercial bank representatives. The mission was briefed by the poverty reduction strategy paper (PRSP) coordinating committee and met with local donor representatives.
The mission team comprised Mr. Green (head-AFR), Mr. Halikias (PDR), Ms. Medina Cas (AFR), Mr. Gershenson (FIN), and Mr. Surti (EP-AFR).
Economic growth picked up to 4¼ percent in 2002/03, benefiting from the rapid expansion of clothing exports and related construction activities. The regional food crisis affected 40 percent of the population, but its impact was mitigated by donor support. The government also provided inputs to farmers, and this initiative caused several quantitative performance criteria in September 2002 and March 2003 to be breached. The government made considerable progress with the structural program and is addressing two performance criteria that were not observed. Agreement was reached on quantitative performance criteria for June and December 2003 and on structural targets through December 2003.
Contents
I. Introduction
II. Recent Developments and Performance Under the Program
A. Recent Developments
B. The PRGF Review
III. The 2003/04 Program
A. Fiscal Policy
B. Budget Reform
C. Monetary Policy and International Reserves
IV. PRSP
V. External Financing
VI. PRGF Arrangement Monitoring
VII. Staff Appraisal
Box
1. Structural Measures
Tables
1. Food Relief Program and Assumptions, 2002/03
2. Selected Economic and Financial Indicators, 1999/2000–2008/09
3. Central Government Operations, Annual, 2000/01–2006/07
4. Central Government Operations, Quarterly, 2002/03–2003/04
5. Balance of Payments, 1999/00–2007/08
6. Central Bank Balance Sheet, March 2001-March 2005
7. Monetary Survey, March 2001-March 2005
8. Quantitative Benchmarks and Performance Criteria, September 2002-March 2003
9. Structural Benchmarks and Performance Criteria, September 2002-March 2003
10. External Financing Requirements and Sources, 1999/2000–2008/09
11. Indicators of Financial Obligations to the Fund, 2000/01–2008/09
12. Phasing of Disbursements Under the PRGF Arrangement, 2001–04
Figure
1. Effective Exchange Rates, January 1995–January 2003
Appendices
I. Letter of Intent
Attachment I: Memorandum on Economic and Financial Policies
Table 1. Quantitative Benchmarks and Performance Criteria June 2003–December 2003
Table 2. Structural Benchmarks and Performance Criteria, June 2003–December 2003
Attachment II: Technical Memorandum of Understanding
II. Relations with the Fund
III. IMF-World Bank Relations
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Press Release No. 03/87
FOR IMMEDIATE RELEASE
June 17, 2003
International Monetary Fund
Washington, D.C. 20431 USA
Telephone 202-623-7100
Fax 202-623-6772
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June 16, 2003
