Minister of Finance Dr Moeketsi Majoro gave a report on the financial and economic status of Lesotho in Maseru on Tuesday the 11th December 2018.

Dr Majoro said the economic status of Lesotho is bad, just as he previously indicated in the last two national budget speeches he made in the Parliament of Lesotho.

He said in the previous budget speech, he pointed out that in July 2017 when they started their tenure in government, they found very challenging financial and economic conditions due to two important factors, being the dwindling SACU revenues because of the underperformance in the South African economy in recent years, and the depletion of both domestic and international reserves by the previous government following an unprecedented and unchecked fiscal decifit in 2016 of nearly ten years of national output.

In his statement he demonstrated that the government deposits and international reserves began to drop in October 2016, and both below or at target at the time the current government took power.

He stated that the last seventeen months have seen the situation continue to deteriorate, with reserves at minimum levels and cash barely adequate to pay off suppliers.

He added that the austerity measures implemented in 2017 and 2018, have not been adequate and have been undermined by weak government controls.

Dr Majoro further said the collection of revenues for fiscal years 2018/2019, and borrowing by the government have fallen short of requirements due to a weakening economy and low participation by financial markets in government borrowing instruments.

He also said due to lack of adequate cash the government has accumulated payment arrears amounting to M1.1 billion, which includes payments going back to April and that the prolonged accumulation of payment arrears could have a devastating impact on businesses and bank balance sheets, as suppliers fail to serve their loans and retain employees and their businesses.

In his statement he said as of Tuesday 11th December 2018, as an interim measure, the Ministry of Finance has been authorized by cabinet to raise additional loan financing, and as a result and in anticipation, they began paying suppliers last Thursday and they plan to pay off all arrears by the end of next week.