The World Bank Country Policy and Institutional Assessment has ranked Lesotho using the three-year moving average as a “medium performer” in terms of policy and institutions with a rating of 3.5. The applicable indicative thresholds for debt sustainability, proposed under the framework for low-income countries are: (i) 40 percent for the NPV of debt-to-GDP ratio, (ii) 150 percent for NPV of debt-to-exports ratio; (iii) 250 percent for the NPV of debt-to-fiscal revenues ratio; (iv) 20 percent for the debt service to exports ratio; and (v) 30 percent for the debt service to revenue ratio.
The nominal public debt data does not include debt issued by the Lesotho Highlands Development Authority (LHDA). Under the terms of the agreement with South Africa, the liabilities of the LHDA, which are equal to about 10 percent of GDP, are not included since LHDA obtains financing to cover its debt service obligations from South Africa.
In the DSA, IDA-hardened terms are incorporated and substituted for standard IDA terms after 2012, and implies a charge of 0.75 percent, grace period of 10 years and a maturity period of 20 years (including the grace period), compared to the 40-year maturity of standard IDA terms.
The depreciation of the loti had a significant effect on the debt-to-GDP ratio in 2008.