Kingdom of Lesotho: Fifth Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Extension of the Arrangement and Rephasing of Disbursement—Informational Annex
Author:
International Monetary Fund. African Dept.
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Publication Date:
22 May 2013
eISBN:
9781484370544
Language:
English
Keywords:
ISCR; CR; Lesotho economy; ECF arrangement; IMF's Executive Board; post control audit function; Africa
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The Extended Credit Facility (ECF) program extended to Lesotho after a sharp fall in revenues remained broadly on track. Lesotho maintained positive growth supported by expansion of mining and construction. Fiscal consolidation efforts have helped to strengthen international reserves, despite weak diamond prices. Executive Directors welcomed the government’s continued efforts to improve the business climate and promote private sector development. They also suggested the need to maintain fiscal consolidation efforts, while safeguarding priority social and growth-promoting capital spending.

Abstract

The Extended Credit Facility (ECF) program extended to Lesotho after a sharp fall in revenues remained broadly on track. Lesotho maintained positive growth supported by expansion of mining and construction. Fiscal consolidation efforts have helped to strengthen international reserves, despite weak diamond prices. Executive Directors welcomed the government’s continued efforts to improve the business climate and promote private sector development. They also suggested the need to maintain fiscal consolidation efforts, while safeguarding priority social and growth-promoting capital spending.

Relations with the Fund

(As of February 28, 2013)

Membership status: Joined 07/25/1968; accepted the obligations of Article VIII, Sections 2, 3, and 4: 03/05/1997.

General resources account:

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SDR Department:

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Outstanding purchases and loans:

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Financial arrangements:

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Projected obligations to fund (SDR million; based on existing use of resources and present holdings of SDRs):

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Safeguards Assessment

An update safeguards assessment was completed November 2012 in connection with the augmentation of the ECF arrangement that occurred earlier in the year. The assessments confirmed that the CBL has taken steps to strengthen safeguards since the 2010 assessment, but also that risks remain. In 2010, Deloitte (South Africa) was appointed as the CBL’s external auditor. The firm has since completed the audits of financial years 2010, 2011, and 2012 within the three-month statutory deadline and issued an unqualified audit opinion following each audit. Since the 2012 assessment, aspects of the monetary data reporting process have been strengthened with IMF technical assistance, and internal auditors worked with the January 2013 IMF mission to confirm test date data. Audit oversight and internal audit remain areas where improvements are needed to strengthen overall governance and accountability.

Exchange arrangement:

Lesotho is a member of the Common Monetary Area (CMA) and the Lesotho loti is both de facto and de jure pegged at par to the South African Rand, which is also legal tender in the country. Lesotho has accepted the obligations of Article VIII, Sections 2, 3, and 4, of the Articles of Agreement and maintains an exchange system free of restrictions on the making of payments and transfers for current international transactions. As of March 31, 2013, the Maloti rate per U.S. dollar was M9.24.

Article IV consultation:

The 2012 Article IV consultation was concluded by the Executive Board on April 9, 2012. Lesotho is on the standard 24-month Article IV consultation cycle.

Technical assistance missions:

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Resident Representatives:

The new IMF resident representative office in Maseru headed by Mr. Michael Tharkur was opened in May 2012.

The Jmap Bank-Fund Matrix

(As of March 31, 2013)

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Cover IMF Staff Country Reports
Kingdom of Lesotho: Fifth Review Under the Three-Year Arrangement Under the Extended Credit Facility and Request for Extension of the Arrangement and Rephasing of Disbursement
Author:
International Monetary Fund. African Dept.
Volume/Issue:
Volume 2013: Issue 127
Publisher:
International Monetary Fund
ISBN:
9781484370544
ISSN:
1934-7685
Pages:
48
DOI:
https://doi.org/10.5089/9781484370544.002