JOHANNESBURG - Policy uncertainty and a weak regional environment have depressed growth in Lesotho below the levels needed to reduce poverty and unemployment, the International Monetary Fund said on Wednesday.
In a statement after an IMF staff team led by Joseph Thornton visited the capital Maseru, the fund said high government spending should be refocused on areas that could have the biggest impact on delivering vital services, protecting the vulnerable and supporting private sector growth in the mountain kingdom.
“The economy remains sluggish, as policy uncertainty, weak regional growth, and recurring drought continue to weigh on growth and depress investment and job creation," Thornton said.
"While work on the second Lesotho Highlands Water Project is keeping growth positive, prospects for exports and remittances are unpromising given continued subdued growth in South Africa and depressed prices for key exports."
He said government finances had been eroded after several years of relatively low inflows from the Southern African Customs Union (SACU), with the government incurring new domestic arrears.