By Poloko Mokhele
The minister of finance Thabo Sophonea will need to propose strict austerity measures and budget cuts in some ministries when he tables the budget allocation for the 20222/2023 financial year in parliament next week.
This, according to the economic experts, is a much needed endeavour to breathe life into Lesotho’s ailing economy.
The economic experts were speaking to theReporter this week ahead of the 2022/23 budget speech which will be read before parliament.
An agricultural economist and lecturer at the National University of Lesotho (NUL), Dr. Montoeli Rantlo, said he was hopeful the budget will be responsive to the current economic status of the country.
“There are a lot of issues facing our country at the moment and the budget speech needs to be responsive to those issues.
“One of the issues is the high crime rate especially the endless murders, gender based violence and stock theft. We need to empower our police and ensure that they are resourced and have all the necessary tools to deal precisely with those issues,” he said.
For his part, financial consultant Robert Likhang observed: “We are facing difficult times in terms of the economy and one expects that as a result there will be a cut of budgets in a number of areas. This will be brought by the fact that the government still owes a lot of suppliers that have been complaining for a very long time.”
He opined that the country is headed for the general elections this year and government might strive to appease people by saying that it will settle its debts.
But he is skeptical that this would be easily achieved given that Sophonea had previously lamented a poor state of the administration’s coffers.
Likhang said he expected the budget could be far lower than the previous ones as the general poll gets close.
“There could also be a likelihood immaterial increases caused by the elections pressure, but they will not be meaningful considering the state of the economy we are in,” he said.
According to the African Development Bank (AfDB), Lesotho’s economy was estimated to contract by 5.2 percent in 2020 from modest growth of 0.6 percent in 2019. This reflects measures to mitigate the Covid–19 pandemic and low external demand, which adversely impacted the mining and manufacturing industries.
Estimates of growth in the mining, textiles and clothing, construction and services sectors were revised downwards by 34.5, 29.3 and 9.9, and 4.2 percentage points in 2020, respectively.
In his speech, last week at the 35th Ordinary Session of the Assembly of the African Union (AU) in Addis Ababa, Ethiopia, the president of the AfDB Akinwunmi Adesina, painted a gloomy picture of Africa, saying dwindling economic fortunes in 2020 resulted in $165 billion decline in Africa’s Gross Domestic Product (GDP). Adesina said in the same year, over 30 million jobs were lost while 26 million persons fell into extreme poverty.
On this, Rantlo commented: “When there are forecasts like these it means we are at a high risk as there are already huge job losses in textile industry which can be considered as the backbone of our economy. We have a private sector that is stagnant, it is not growing and I think the only sector that we can say is still surviving is the textile industry although it is already cloaked in a lot of problems.”
He appealed: “My wish is that the budget speech will propose relief packages for that sector, not for employees only like we saw in 2020 but for the business operators too because they do not receive any support, there will close shop and the unemployment rate will remain high.”
