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Fiscal challenges demand immediate attention: Matlanyane

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Finance and development planning minister, Retṥelisitsoe Matlanyane, has warned that the government’s heavy reliance on Southern African Customs Union (SACU) revenues, which currently constitute 27.8 percent of gross domestic product (GDP), exposes the country to significant external vulnerabilities.

In her 2025/2026 budget speech to parliament today, Matlanyane said the volatile nature of these receipts, coupled with the government’s high wage bill at 17.8 percent of GDP – well above the SADC regional average – creates a precarious fiscal position that requires careful management.

“We face additional pressures from external economic shocks, including global market uncertainties and regional economic fluctuations that could impact our trade relations and revenue streams. The substantial portion of our expenditure dedicated to recurrent costs, at 79.4 percent of total spending, limits our fiscal flexibility to respond to unforeseen challenges and must be addressed,” she pointed out.

Matlanyane also indicated while Lesotho’s current fiscal surplus of 10.6 percent of GDP provides some buffer, the country must remain vigilant and proactive in its fiscal management.

This requires developing more robust domestic revenue sources, implementing structural reforms to optimise public spending, and building stronger fiscal buffers to weather future economic storms, she emphasized. She added that commitment to fiscal prudence must be balanced with the need to maintain essential services and protect the most vulnerable citizens during these uncertain times.

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