Maseru, March 08 – The Portfolio Committee on Economic and Development Cluster agrees with the Minister of Finance and Development Planning that the tax rate is already high and increasing it further will negatively impact investment in the country.

In its report tabled by Committee’s Chairperson Mr. Sello Hakane in the National Assembly on Friday therefore said it was imperative that the Ministry Finance and Development Planning works with the Ministry of Trade, Industry, Cooperatives and  Marketing to locate businesses which have not been paying tax and do so in due course.

He said the Committee agrees with the Ministry’s initiative to reduce borrowing and focus more on building buffers in order to sustain the country during adverse situations.

‘It also agrees that borrowing should be meant to promote investment rather than for consumption through recurrent expenditure’ he highlighted in the report.

Furthermore, Mr. Hakane said the Ministry of Finance and Development Planning should collect from Government Ministries and Departments, all documents necessary for reconciliation and recovery of arrears by Government to avoid growing backlog affecting Government spending.

He stated that the Ministry of Finance and Development Planning briefed the Committee on the Budget process and the various instruments employed to formulate this year’s Budget.

Mr. Hakane said they also outlined the fiscal and the monetary policies of the Government of Lesotho, adding that this year’s budget is themed: “Building on Resilience, Working Together, and Fostering Sustainable and Fair Growth.”

Again, the Committee’s Chairperson said the Ministry stated that through this year’s budget, the Government intends to use a synergistic approach by creating an integrated planning and budgeting strategy that will enable a business environment to be inclusive, fair and productive.

He said it also intends to transform the existing situation to a conducive and friendly environment for the private sector to thrive.

Speaking about the Economic Performance and Outlook, he said the Minister stated that Lesotho has to navigate the rapidly-evolving global economic dynamics as they present shocks and uncertainty to their environment, an atmosphere that this country has suffered before.

‘’She stated therefore that the country has to adapt to new parameters for the government strategies to remain relevant and impactful in the ever-evolving landscape of global economic dynamics’’ he underscored.

He said global economic indicators show a subdued to stable global growth and moderate inflation from the United States, China, Sub-Saharan Africa and the Republic of South African markets which Lesotho has economic ties with.

Mr. Hakane therefore noted that it was evident that this trend will influence a steady growth and moderate inflation of the Lesotho economy.

The Committee’s chairperson also hinted that Lesotho’s economic performance is aligned with that of South Africa due to Lesotho’s close integration, interdependence and the Loti-Rand peg.

In conclusion, he said Lesotho’s economic growth is influenced mostly by the diamond mining activities, robust expansion in the construction sector driven by the Lesotho Highlands Water Project II (LHWP II) and growth across different sectors and that this brings a projection of Lesotho’s domestic economy to a growth rate of 2 percent in 2024/2025.

Minister of Finance and Development Planning Dr. Rets’elisitsoe Matlanyane presented the budget speech in the joint sitting of parliament on February 21 this year.

The Portfolio Committee on Economic and Development Cluster is made up of Members of Parliament (MPs) drawn from all the political parties represented in the 11th parliament.