Neo Kolane
Lesotho’s hard-earned economic progress is under threat due to rampant corruption, finance and development planning minister, Retṥelisitsoe Matlanyane has said.
Presenting her mid-term budget speech for the 2023/2024 financial year in parliament on Wednesday this week, the minister stressed that urgent and decisive actions are needed to fight graft in the country.
She noted that the government was going all out to fight corruption and ensure that it does not retard economic growth.
To this end, she revealed, the Directorate on Corruption and Economic Offences had achieved significant successes, including recovery of M1.1 million from the M7 million stolen from Econet Lesotho by Mafeteng-based Indian businessman Walim Ashraf.
The unit also repatriated M5 million linked to the M50 million stolen from the ministry of finance and development planning through a well-orchestrated scheme involving one prominent suspect and officials in the ministry.
The suspect, Lehlohonolo Selate, made headlines in 2021 when he appeared in court facing charges of defrauding the government of over M50 million.
Selate allegedly connived with employees of the ministry of finance to facilitate fraud by claiming to pay companies which they falsely presented on claims that the firms had provided services to various government ministries and departments.
Matlanyane told parliament that the anti-corruption unit also secured forfeiture orders for properties and initiated freezing orders in cases involving a total of M44.1 million. “Perpetrators are being apprehended, and citizens must remain resolute as we intensify our efforts to combat corruption and preserve our economic well-being,” she said.
Turning to the performance of the economy, the minister said government has revised down growth projections for 2023/24.
Matlanyane also noted that the quarterly statistics had revealed that real gross domestic product (GDP) has slowed in the first half of the year.
Growth during this period recorded a contraction of 0.7 percent on average.
This contraction was largely driven by poor performance in the agricultural sector, which contracted by 9.2 percent on average during the first and the second quarter, with manufacturing sector contracting by five percent on average.
On the other hand, tourism sector recorded a considerable average growth of 22.1 percent between the first and the second quarters.
“This brings us to the downward revision of annual growth to 1.8 percent by end of 2023/24 from a projection of 2.3 percent,” Matlanyane said.
She pointed out that the manufacturing sector particularly textile sub-sector, contributed to the slowdown and is projected to contract by 2.5 percent. The industry continues to face external challenges coupled with competitive pressure.
However, growth in 2023/24 through the medium term, is expected to be driven by Lesotho Highlands Water Project (LHWP) II mega project, she said.
Matlanyane added that inflation and price developments in Lesotho are expected to continue to be in line with those in South Africa over short to medium term.
Turning to the fiscal performance for the first half of 2023/24 vis-a-vis the approved budget, it is envisaged that revenue is likely to underperform by M2,4 billion and register M22,7 billion which is in line with nominal GDP growth which slowed this year.
Contributing to this poor performance is tax revenue, which is likely to miss its target of M11 billion by 17 percent, equivalent to M1,9 billion.
Matlanyane also showed that the government had embarked on major fiscal measures aimed at reinforcing long term fiscal sustainability and providing sufficient buffers to guard against domestic and external shocks and imbalances.
These include concluding a Medium-Term Debt Strategy and Debt Sustainability Analysis, reducing the stock of domestic arrears, and enacting the Public Procurement Bill 2023, to stop practices of procurement outside the Integrated Financial Management Information System (IFMIS) used by government.
The government had also slowed the wage bill growth by consolidating ministries to remain with adequate staff, she explained.
She said the government was determined to continue with its fiscal consolidation efforts and to address expenditure challenges, particularly in reducing the wage bill through comprehensive reforms.
“In the coming sessions, we will present legislation to Parliament, addressing the prerequisites for the successful realisation of Millennium Challenge Account II, including the Bursary Bill, fiscal stabilisation, and fiscal rule enactments.
“Additionally, we are dedicated to the crucial task of advancing the national reforms agenda, which is pivotal to our nation’s progress including those related to addressing the critical issue of crime,” Matlanyane concluded.
