The Board of the International Monetary Fund (IMF) has approved
an amount equivalent to Special Drawing Rights (SDR) of 5.68 million (about US$8.6 million)
An IMF statement, made available to PANA in New York, on Monday said that the Board’s
decision was based on the completion of the sixth and final review of Lesotho’s performance
under the programme supported by the Extended Credit Facility (ECF) arrangement.
The IMF said that the approval brought the total disbursements under the arrangement to
an amount equivalent to SDR 50.605 million (about US$76.6 million).
It stated: “The authorities have expressed interest in a successor arrangement, which
would expedite achieving the medium-term reserve target, help address structural
weaknesses, and catalyze support from its international partners”.
It recalled that Lesotho’s three-year ECF arrangement was approved on 2 June, 2010, with
total access equivalent to SDR 41.88 million (about US$63.4 million).
“To cushion the impact of the 2010-11 flood damage and high international commodity
prices, the IMF’s Executive Board approved an augmentation of access of 25 percent
of quota in April 2012, bringing total access to SDR 50.605 million (about US$76.6 million),
under the ECF arrangement,” the statement noted.
Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Board’s Chair, said:
“Lesotho’s macroeconomic policies, supported by the ECF arrangement, have served
to ensure macroeconomic stability and secure robust growth”.
He, also said that, “despite a series of adverse shocks, including the fall in Southern
African Customs Union (SACU) revenues in 2010–11 and weather-related shocks in
2011 and 2012, fiscal and external sustainability have been maintained”.
According to him: “Economic growth has been robust for the last three years, while
inflation has subsided, reflecting moderation in international commodity prices”.
“The authorities remain committed to prudent fiscal policies. With fiscal adjustment
efforts and the recovery of SACU revenues, in 2012/13, a fiscal surplus was recorded
for the first time since 2008/09.
“In light of the downside risks associated with the global and regional economic
outlook, it will be important to maintain prudent fiscal policies by containing recurrent
spending and improving revenue administration,” he stated.
Mr. Shinohara added that, “such a policy stance will help Lesotho achieve reserve
coverage of five months of imports, its medium-term target for international
“To support the implementation of prudent fiscal policies, further progress in public
financial management and civil service reforms is needed. The establishment of the
Cash Management Unit and the monthly reconciliation of all treasury accounts will
help improve expenditure control and the monitoring of revenue collection,” the
IMF official stressed.
He, however, noted that, “the authorities have made progress in improving the
business climate and promoting private sector-led growth, with developing the
national identification card system”.
“The Central Bank of Lesotho continues to improve the regulatory frameworks for
banks and nonbank financial institutions to promote financial sector developments
with proper supervisory oversight.
“The authorities’ strong policy efforts, supported by the ECF arrangement, have
helped attain macroeconomic stability and strong growth,”
“Given the economic challenges that Lesotho still faces, continued engagement
with the Fund should further support the authorities’ efforts, building on the
progress under the current arrangement”, Mr. Shinohara stated.