Abstract
April 8, 2019
Contents
April 8, 2019
Prepared By African Department
(In consultation with other departments)
Contents
RELATIONS WITH THE IMF
RELATIONS WITH OTHER INTERNATIONAL FINANCIAL INSTITUTIONS
STATISTICAL ISSUES
Relations with the IMF
(As of March 20, 2019)
Membership Status
Joined 07/25/1968; accepted the obligations of Article VIII, Sections 2, 3, and 4: 03/05/1997.
| General Resources Account | SDR Million | % Quota |
|---|---|---|
| Quota | 69.80 | 100.00 |
| IMF holdings of currency (Exchange Rate) | 57.16 | 81.893 |
| Reserve Tranche Position | 12.61 | 18.07 |
| General Resources Account | SDR Million | % Quota |
|---|---|---|
| Quota | 69.80 | 100.00 |
| IMF holdings of currency (Exchange Rate) | 57.16 | 81.893 |
| Reserve Tranche Position | 12.61 | 18.07 |
| SDR Department: | SDR Million | % Allocation |
|---|---|---|
| Net cumulative allocation | 32.88 | 100.00 |
| Holdings | 21.85 | 66.47 |
| SDR Department: | SDR Million | % Allocation |
|---|---|---|
| Net cumulative allocation | 32.88 | 100.00 |
| Holdings | 21.85 | 66.47 |
| Outstanding Purchases and Loans | SDR Million | % Quota |
|---|---|---|
| ECF1 arrangements | 34.58 | 49.54 |
| Outstanding Purchases and Loans | SDR Million | % Quota |
|---|---|---|
| ECF1 arrangements | 34.58 | 49.54 |
Financial Arrangements:
| Type | Approval Date | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| ECF | 06/02/2010 | 09/17/2013 | 50.61 | 50.61 |
| ECF1 | 03/09/2001 | 10/31/2004 | 24.50 | 24.50 |
| Stand-By | 09/23/1996 | 09/22/1997 | 7.17 | 0.0 |
| Type | Approval Date | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| ECF | 06/02/2010 | 09/17/2013 | 50.61 | 50.61 |
| ECF1 | 03/09/2001 | 10/31/2004 | 24.50 | 24.50 |
| Stand-By | 09/23/1996 | 09/22/1997 | 7.17 | 0.0 |
Projected Payments to the IMF
(SDR Million; based on existing use of resources and present holdings of SDRs)
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Principal | 10.12 | 9.34 | 7.99 | 5.42 | 1.70 |
| Charges/interest | 0.09 | 0.13 | 0.13 | 0.13 | 0.13 |
| Total | 10.22 | 9.47 | 8.12 | 5.54 | 1.83 |
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Principal | 10.12 | 9.34 | 7.99 | 5.42 | 1.70 |
| Charges/interest | 0.09 | 0.13 | 0.13 | 0.13 | 0.13 |
| Total | 10.22 | 9.47 | 8.12 | 5.54 | 1.83 |
Safeguards Assessment
An updated safeguards assessment, completed in November 2012, confirmed that the CBL has taken steps to strengthen safeguards since the 2010 assessment, but also that risks remain. Deloitte (South Africa), appointed as the CBL’s external auditor in 2010, has since completed the audits of financial years 2010 to 2016 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. However, 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). The de facto and de jure exchange rate arrangement are classified as a conventional peg 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. Lesotho maintains one exchange restriction arising from single discretionary allowances of M1 million per individual per calendar year, for residents over 18, and of M200,000 on the same basis for residents under 18. The availability of foreign exchange beyond these limits is subject to a discretionary approval on a case by case basis. As of March, 20 2019, the maloti rate per U.S. dollar was M14.5.
Article IV Consultation
The 2017 Article IV consultation was concluded by the Executive Board on February 28, 2018. Lesotho is on the standard 12-month Article IV consultation cycle.
Technical Assistance
The Fund has been providing Lesotho with technical assistance and training to help authorities strengthen their capacity to design and implement effective policies. Technical assistance covers wide range of areas in macroeconomic, fiscal, and monetary. Specific technical assistance projects since 2016 are the following:
| Fiscal Affairs Department | ||
|---|---|---|
| Public financial management (IFMIS) | Short-term | 2019 |
| Post clearance audit | Short-term | 2018 |
| Tax policy | Short-term | 2018 |
| Public financial management | Short-term | 2018 |
| Financial reporting | Short-term | 2018 |
| Managing the government wage bill | Short-term | 2016 |
| Medium-term budget planning, cash management, and fiscal reporting | Short-term | 2016 |
| Compliance risk management | Short-term | 2016 |
| Legal Department | ||
| AM L/CFT | Short-term | 2018 |
| Tax legislation | Short-term | 2017 |
| Monetary and Capital Markets Department | ||
| Medium-term debt strategy | Short-term | 2017 |
| Risk-based supervision | Short-term | 2017 |
| Payment systems | Short-term | 2017 |
| Statistics Department | ||
| Government finance statistics | Short-term | 2019 |
| Price statistics | Short-term | 2019 |
| Government finance statistics | Short-term | 2018 |
| Monetary and financial statistics | Short-term | 2018 |
| National accounts statistics | Short-term | 2017 |
| Price statistics | Short-term | 2017 |
| Fiscal Affairs Department | ||
|---|---|---|
| Public financial management (IFMIS) | Short-term | 2019 |
| Post clearance audit | Short-term | 2018 |
| Tax policy | Short-term | 2018 |
| Public financial management | Short-term | 2018 |
| Financial reporting | Short-term | 2018 |
| Managing the government wage bill | Short-term | 2016 |
| Medium-term budget planning, cash management, and fiscal reporting | Short-term | 2016 |
| Compliance risk management | Short-term | 2016 |
| Legal Department | ||
| AM L/CFT | Short-term | 2018 |
| Tax legislation | Short-term | 2017 |
| Monetary and Capital Markets Department | ||
| Medium-term debt strategy | Short-term | 2017 |
| Risk-based supervision | Short-term | 2017 |
| Payment systems | Short-term | 2017 |
| Statistics Department | ||
| Government finance statistics | Short-term | 2019 |
| Price statistics | Short-term | 2019 |
| Government finance statistics | Short-term | 2018 |
| Monetary and financial statistics | Short-term | 2018 |
| National accounts statistics | Short-term | 2017 |
| Price statistics | Short-term | 2017 |
Relations with other International Financial Institutions
World Bank: https://www.worldbank.org/en/country/lesotho
African Development Bank: https://www.afdb.org/en/countries/southern-africa/lesotho/
Regional Technical Assistance Center for Southern Africa: http://www.southafritac.org/
Statistical Issues
| As of March, 2019 | |
| I. Assessment of Data Adequacy for Surveillance | |
| General: Data provision is broadly adequate for surveillance with some key data shortcomings in fiscal and national accounts statistics. | |
| National Accounts: The Bureau of Statistics (BOS) compiles and reports national accounts statistics on an annual basis—in current prices and volume terms by the Production and expenditure. Statistical methods used to derive GDP have improved and new sources of data have been developed, although serious challenges remain. Revised and rebased national accounts were published in October 2016. The base year is 2012. The source data need to be improved, in particular, for the estimates of the expenditure side. Poor quality of imports data has been a long-standing problem hampering the expenditure estimates. Private consumption and gross fixed capital formation are now estimated independently. A new Household Budget Survey (HBS) was conducted in 2017, but the results are of poor quality and cannot be used in the rebase of national accounts. Estimates of quarterly GDP by the production approach are being developed and are expected to be released in April 2019. | |
| Price Statistics: The official monthly consumer price index (CPI), a composite of urban and rural price data, is available on a timely basis. The index has been re-referenced to December 2016 = 100. The work on developing producer price indices is ongoing. In the meantime, the national accounts rely on South Africa’s producer price index and import price indices. | |
| Government Finance Statistics (GFS): The Ministry of Finance compiles and disseminates GFS consistent with the GFSM 2001 for the budgetary central government. Monthly GFS for the budgetary central government are reported on a regular basis on the national summary data page (NSDP); and annual GFS have consistently been reported to the GFS yearbook. Long standing data quality issues pertaining to discrepancies between transactions above and below the lines have improved, but classification issues remain however, for some revenue items. The authorities have started compiling GFS for local governments, with help from technical assistance by STA, and are expected to start disseminating those data annually going forward. Compilation of consolidated general government GFS remains challenging, for lack of comprehensive data on extrabudgetary units. No comprehensive balance sheet data is currently compiled, and public-sector debt statistics compiled only cover the budgetary central government but have not been disseminated. | |
| Monetary and Financial Statistics (MFS): The Central Bank of Lesotho (CBL) reports monetary data on a regular basis using the Standardized Report Forms (SRFs), with monthly data disseminated through the IFS. Improved data sources helped enhance the classification and sectorization in the accounts. The institutional coverage of MFS, however, needs to be expanded to include other financial corporations. The CBL is working on expanding coverage and, to that effect, insurance companies have been trained on MFS template and beginning January 2018 started to report through the Banking Supervision Application (BSA). The next phase of coverage improvement is pension funds. Financial Sector Surveillance The CBL has begun the process of compiling consistent financial sector indicators (FSIs) from 2006 onwards. FSIs on depository corporations are reported on a quarterly basis, but FSIs on non-financial corporations, households, and real estate markets are not available. Efforts are underway to compile FSIs for the insurance sector and real estate markets. Lesotho reports data on some series and indicators of the Financial Access Survey (FAS), including the two indicators of the U.N. Sustainable Development Goals. | |
| Balance of payments: Since January 2017, Lesotho has improved the timeliness of submitting BPM6-based balance of payments and (partial) IIP data to STA. To further enhance data quality, improvements are needed in coverage, methodological soundness, and consistency between the balance of payments and IIP. The CBL is being assisted by the Macro-economic and Financial Management Institute (MEFMI) in conducting a private capital flow survey to collect financial account transactions and position data. | |
| II. Data Standards and Quality | |
| Lesotho became, in 2003, a participant of a GDDS, which was superseded by the enhanced GDDS (e-GDDS) in 2015. Lesotho has implemented the recommendations of e-GDDS in 2016. It disseminates twelve of the fourteen data categories needed for surveillance on its National Summary Data Page (NSDP). We encourage the authorities to disseminate the remaining data categories, general government operations and external debt, and further improve periodicity and timeliness. | No Data ROSC mission has been conducted in Lesotho. |
| As of March, 2019 | |
| I. Assessment of Data Adequacy for Surveillance | |
| General: Data provision is broadly adequate for surveillance with some key data shortcomings in fiscal and national accounts statistics. | |
| National Accounts: The Bureau of Statistics (BOS) compiles and reports national accounts statistics on an annual basis—in current prices and volume terms by the Production and expenditure. Statistical methods used to derive GDP have improved and new sources of data have been developed, although serious challenges remain. Revised and rebased national accounts were published in October 2016. The base year is 2012. The source data need to be improved, in particular, for the estimates of the expenditure side. Poor quality of imports data has been a long-standing problem hampering the expenditure estimates. Private consumption and gross fixed capital formation are now estimated independently. A new Household Budget Survey (HBS) was conducted in 2017, but the results are of poor quality and cannot be used in the rebase of national accounts. Estimates of quarterly GDP by the production approach are being developed and are expected to be released in April 2019. | |
| Price Statistics: The official monthly consumer price index (CPI), a composite of urban and rural price data, is available on a timely basis. The index has been re-referenced to December 2016 = 100. The work on developing producer price indices is ongoing. In the meantime, the national accounts rely on South Africa’s producer price index and import price indices. | |
| Government Finance Statistics (GFS): The Ministry of Finance compiles and disseminates GFS consistent with the GFSM 2001 for the budgetary central government. Monthly GFS for the budgetary central government are reported on a regular basis on the national summary data page (NSDP); and annual GFS have consistently been reported to the GFS yearbook. Long standing data quality issues pertaining to discrepancies between transactions above and below the lines have improved, but classification issues remain however, for some revenue items. The authorities have started compiling GFS for local governments, with help from technical assistance by STA, and are expected to start disseminating those data annually going forward. Compilation of consolidated general government GFS remains challenging, for lack of comprehensive data on extrabudgetary units. No comprehensive balance sheet data is currently compiled, and public-sector debt statistics compiled only cover the budgetary central government but have not been disseminated. | |
| Monetary and Financial Statistics (MFS): The Central Bank of Lesotho (CBL) reports monetary data on a regular basis using the Standardized Report Forms (SRFs), with monthly data disseminated through the IFS. Improved data sources helped enhance the classification and sectorization in the accounts. The institutional coverage of MFS, however, needs to be expanded to include other financial corporations. The CBL is working on expanding coverage and, to that effect, insurance companies have been trained on MFS template and beginning January 2018 started to report through the Banking Supervision Application (BSA). The next phase of coverage improvement is pension funds. Financial Sector Surveillance The CBL has begun the process of compiling consistent financial sector indicators (FSIs) from 2006 onwards. FSIs on depository corporations are reported on a quarterly basis, but FSIs on non-financial corporations, households, and real estate markets are not available. Efforts are underway to compile FSIs for the insurance sector and real estate markets. Lesotho reports data on some series and indicators of the Financial Access Survey (FAS), including the two indicators of the U.N. Sustainable Development Goals. | |
| Balance of payments: Since January 2017, Lesotho has improved the timeliness of submitting BPM6-based balance of payments and (partial) IIP data to STA. To further enhance data quality, improvements are needed in coverage, methodological soundness, and consistency between the balance of payments and IIP. The CBL is being assisted by the Macro-economic and Financial Management Institute (MEFMI) in conducting a private capital flow survey to collect financial account transactions and position data. | |
| II. Data Standards and Quality | |
| Lesotho became, in 2003, a participant of a GDDS, which was superseded by the enhanced GDDS (e-GDDS) in 2015. Lesotho has implemented the recommendations of e-GDDS in 2016. It disseminates twelve of the fourteen data categories needed for surveillance on its National Summary Data Page (NSDP). We encourage the authorities to disseminate the remaining data categories, general government operations and external debt, and further improve periodicity and timeliness. | No Data ROSC mission has been conducted in Lesotho. |
Lesotho: Table of Common Indicators Required for Surveillance
(As of March 20, 2019)
Daily (D); Weekly (W); Monthly (M); Bi-monthly (B); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).
Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The GG consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition. Due to capacity constraints, the authorities do not report revenue, expenditure, balance and financing composition for general government.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Lesotho: Table of Common Indicators Required for Surveillance
(As of March 20, 2019)
| Date of Latest Observation | Date Received | Frequency of Data1 | Frequency of Reporting1 | Frequency of Publication1 | |
|---|---|---|---|---|---|
| Exchange Rates | Feb-2019 | March-2019 | D | D | I |
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities2 | Jan-2019 | March-2019 | D | D | Q |
| Reserve/Base Money | Jan-2019 | March-2019 | D | D | Q |
| Broad Money | Jan-2019 | March-2019 | M | M | Q |
| Central Bank Balance Sheet | Jan-2019 | March-2019 | D | D | Q |
| Consolidated Balance Sheet of the Banking System | Jan-2019 | March-2019 | D | D | Q |
| Interest Rates3 | Jan-2019 | March-2019 | M | M | Q |
| Consumer Price Index | Nov-2018 | Dec-2018 | M | M | M |
| Revenue, Expenditure, Balance and Composition of Financing4—General Government (GG)5 | N.A. | N.A. | N.A. | N.A. | N.A. |
| Revenue, Expenditure, Balance and Composition of Financing4 – Central Government | Sept-30–17 | Nov-2017 | M | M | A |
| Stocks of Central Government and Central Government-Guaranteed Debt6 | Mar-31–2017 | Nov-2017 | M | I | A |
| External Current Account Balance | Q3–2018 | Dec-2018 | Q | Q | Q |
| Exports and Imports of Goods and Services | Q3–2018 | Dec-2018 | Q | Q | Q |
| GDP/GNP | 2017 | Dec-2018 | A | A | A |
| Gross External Debt | Mar-31–2017 | Nov-2017 | M | I | A |
| International Investment Position7 | Q3–2018 | Ded-2018 | Q | Q | Q |
Daily (D); Weekly (W); Monthly (M); Bi-monthly (B); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).
Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The GG consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition. Due to capacity constraints, the authorities do not report revenue, expenditure, balance and financing composition for general government.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Lesotho: Table of Common Indicators Required for Surveillance
(As of March 20, 2019)
| Date of Latest Observation | Date Received | Frequency of Data1 | Frequency of Reporting1 | Frequency of Publication1 | |
|---|---|---|---|---|---|
| Exchange Rates | Feb-2019 | March-2019 | D | D | I |
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities2 | Jan-2019 | March-2019 | D | D | Q |
| Reserve/Base Money | Jan-2019 | March-2019 | D | D | Q |
| Broad Money | Jan-2019 | March-2019 | M | M | Q |
| Central Bank Balance Sheet | Jan-2019 | March-2019 | D | D | Q |
| Consolidated Balance Sheet of the Banking System | Jan-2019 | March-2019 | D | D | Q |
| Interest Rates3 | Jan-2019 | March-2019 | M | M | Q |
| Consumer Price Index | Nov-2018 | Dec-2018 | M | M | M |
| Revenue, Expenditure, Balance and Composition of Financing4—General Government (GG)5 | N.A. | N.A. | N.A. | N.A. | N.A. |
| Revenue, Expenditure, Balance and Composition of Financing4 – Central Government | Sept-30–17 | Nov-2017 | M | M | A |
| Stocks of Central Government and Central Government-Guaranteed Debt6 | Mar-31–2017 | Nov-2017 | M | I | A |
| External Current Account Balance | Q3–2018 | Dec-2018 | Q | Q | Q |
| Exports and Imports of Goods and Services | Q3–2018 | Dec-2018 | Q | Q | Q |
| GDP/GNP | 2017 | Dec-2018 | A | A | A |
| Gross External Debt | Mar-31–2017 | Nov-2017 | M | I | A |
| International Investment Position7 | Q3–2018 | Ded-2018 | Q | Q | Q |
Daily (D); Weekly (W); Monthly (M); Bi-monthly (B); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).
Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The GG consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition. Due to capacity constraints, the authorities do not report revenue, expenditure, balance and financing composition for general government.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Formerly PRGF.