Kingdom of Lesotho: 2023 Article IV Consultation-Press Release; and Staff Report

The 2023 Article IV Consultation discusses that Lesotho’s economy continues to face a number of challenges in the wake of the pandemic. Climate shocks, delays to infrastructure projects, high food and fuel prices, declining diamond prices, layoffs in the textiles sector, and weak regional and external demand are weighing on activity. The government is prioritizing fiscal consolidation on the back of windfall transfers from the Southern African Customs Union, which have helped alleviate near-term pressures on financing and reserves. Alongside, broad-ranging structural reforms will be vital for the economy to transition to durable, resilient, inclusive, job-rich, and sustainable private sector-led growth. The IMF Staff strongly encourages efforts to improve the business environment, strengthen financial stability, and enhance business lending. The Staff strongly encourages the authorities to continue their efforts to increase capacity, improve data quality, and coordinate closely on macroeconomic policies. High data quality and information sharing are critical for policymaking—from measuring economic performance to forecasting.