- Following a difficult year of stagnation, Lesotho is set to experience an estimated economic growth of 2.5 percent in the 2006-07 fiscal year. This is translated to real growth per capita, as the Kingdom's population currently is detracting due to the AIDS pandemic.
According to the latest International Monetary Fund (IMF) report on Lesotho, GDP growth in the 2005-06 fiscal year was only estimated at 1.3 percent. The current fiscal year is projected to become somewhat better in the impoverished Kingdom, with an expected growth rate at 2.5 percent.
In most African countries, such a low GDP growth rate would actually mean more poverty, as the population is growing at an even faster rate (typically between 2.0 and 3.5 percent). In Lesotho, however these numbers are translated into real per capita growth, as the population currently is shrinking at an annual rate of 0.45 percent due to the high HIV/AIDS prevalence rate that is has caused a very high mortality rate.
The IMF report describes a year of progress in Lesotho, despite external shocks and great difficulties. The Maseru government had "made good progress toward macroeconomic stability in recent years," the report said, referring to Lesotho's compliance to IMF-prescribed economic reforms.
Externally inflicted problems had been grave during the last few years. Agricultural production was hit by drought in 2002-05 and excessive rainfall in early 2006, which also damaged roads and bridges in the rural areas where about 70 percent of the population lives.
The manufacturing sector was adversely affected by a substantial appreciation of the national currency, the loti, in 2002-2004 and the removal of textile quotas by industrial countries in early 2005, which led to the loss of about a quarter of jobs in the garment sector.
Despite these shocks, the Maseru government had been able to make some economic gains. Its fiscal balance has been in surplus since 2003/04, "owing mainly to rapidly rising receipts from the South African Customs Union (SACU) and improved domestic revenue collection," the IMF report found.
Also, Maseru had been able to achieve bilateral agreements restraining exports from China to the US market, causing its garments sector to see a modest recovery. Some re-employment has taken place the last year.
While the Kingdom experiences some growth and macroeconomic gains, the external shocks hitting agriculture and the garments sector - combined with the ongoing HIV/AIDS crisis - have only lead to growing poverty in Lesotho. More than half of Basothos are now believed to live below the poverty line.
The IMF report highlights plans by the Maseru government to reduce poverty in its 2006-07 budget, which included "a significant increase in expenditures on infrastructure." Further, "the wage bill and other recurrent outlays" were also projected to increase relative to GDP. However, Lesotho would also have to increase its budget expenditures on debt repayments this year.
"Lesotho's medium-term outlook is clouded by considerable downside risks, including a further loss of trade preferences for the export sector and a decline in SACU receipts relative to GDP," the IMF finally cautioned, seeing little hope for the Kingdom to tackle its problem of widespread poverty during the next years.
afrol News - It is called "financial inclusion", and it is a key government policy in Rwanda. The goal is that, by 2020, 90 percent of the population is to have and actively use bank accounts. And in only four years, financial inclusion has doubled in Rwanda.
afrol News - The UN's humanitarian agencies now warn about a devastating famine in Sudan and especially in South Sudan, where the situation is said to be "imploding". Relief officials are appealing to donors to urgently fund life-saving activities in the two countries.
afrol News - Fear is spreading all over West Africa after the health ministry in Guinea confirmed the first Ebola outbreak in this part of Africa. According to official numbers, at least 86 are infected and 59 are dead as a result of this very contagious disease.
afrol News - It is already a crime being homosexual in Ethiopia, but parliament is now making sure the anti-gay laws will be applied in practical life. No pardoning of gays will be allowed in future, but activist fear this only is a signal of further repression being prepared.
afrol News / Africa Renewal - Ethiopia's ambitious plan to build a US$ 4.2 billion dam in the Benishangul-Gumuz region, 40 km from its border with Sudan, is expected to provide 6,000 megawatts of electricity, enough for its population plus some excess it can sell to neighbouring countries.
front page
| news
| countries
| archive
| currencies
| news alerts login
| about afrol News
| contact
| advertise
| español