MASERU — The government will in the next five years subject all new capital projects to strict appraisal mechanisms to assess
their contributions to economic growth, employment and income growth.
Finance Minister Timothy Thahane told parliament yesterday that there is need to monitor government projects closely to save money and avoid depleting revenue collected from the Southern African Customs Union (Sacu).
Thahane said Lesotho has not been seriously affected by the global economic downturn and the decline in Sacu revenues because it has been able to effectively manage its finances between 2003 and 2009.
“Fiscal policy remains a linchpin of economic management in Lesotho,” Thahane told parliament.
“Between 2003/04 and 2008/09, Lesotho experienced fiscal surpluses, driven by large Sacu receipts.”
Thahane added: “Instead of using these surpluses to expand public administration and consumption, the government adopted a strategy of building reserves and paying off some expensive commercial loans which had been acquired in the past.”
Thanane said such a strategy had “reduced our annual debt service and released resources to finance other development activities”.
Thahane said when the financial crisis hit in 2008/09 and Sacu revenues declined, the government was able to use its accumulated reserves to finance the deficit.
He said this strategy enabled Lesotho “to come through the crisis relatively unscathed compared to what is going on in the Euro-zone.”
Thahane said in the coming five years the government intends to rebuild its reserves towards a five-month import cover to pursue fiscal consolidation.
“We will limit budget deficits as a percent of GDP at three percent, while keeping debt at sustainable levels,” he said.
“The government will also keep recurrent costs relatively constant in real terms while allowing only increases associated with productive investment.”
Thahane said the strategic shift in expenditures will be accompanied by increased efforts in mobilising domestic revenue and improving efficiency and accountability in the management of public funds.
He said the government will 0cut waste and fraud in its operations, particularly in the use of vehicles, local and international subsistence, training and procurement of goods and services.
He said Prime Minister Pakalitha Mosisili has directed him to prepare a National Strategic Development Plan which is meant to define an implementation strategy to attain goals set in the Vision 2020 programme.
The document which was drafted in 2004 says Lesotho should have attained a stable democracy, a united and prosperous nation at peace with itself and its neighbours by 2020.
“It shall have a healthy and well developed human resource base. Its economy will be strong, its environment well managed and its technology well established,” the document says.