Government spending in South African country Lesotho – including on public sector wages – requires tighter controls amid a lack of incoming cash, the IMF has warned.
Economic growth in Lesotho is expected to slowly recover this financial year, driven by trading in natural resources – specifically diamonds – and higher textile exports.
However, the country’s current account deficit has widened due to a decline in revenue, IMF team leader Joseph Thornton said at the end of his visit to the kingdom.
He added that public spending and wage-bill demands “had rapidly depleted government deposits”, adding that poor public financial management was further hindering effective budget planning and implementation.
As Lesotho prepares its budget for the 2019 financial year, the IMF called for the government to better control spending.
To protect the poor amid this period of austerity, the IMF called on the government to strengthen social security, such as benefits, and ensure it is spending more efficiently on ‘human capital’ – education and health – to achieve growth.
It added that reforms should be focused on empowering growth in the private sector to create more jobs