Bud­get de­lay sub­dues eco­nomic ac­tiv­ity

Lesotho Times - - Business - Staff Writer

ECO­NOMIC ac­tiv­ity in Le­sotho de­clined by 10.2 per­cent in the se­cond quar­ter of 2015 ow­ing to the de­lay in the pre­sen­ta­tion of the bud­get.

This is ac­cord­ing to a Cen­tral Bank of Le­sotho (CBL) Quar­terly Re­view of mon­e­tary and fi­nan­cial ac­tiv­ity for the pe­riod March to June 2015.

The re­view notes that the sub­dued eco­nomic ac­tiv­ity was a re­sult of the late ex­e­cu­tion of the bud­get which was pre­sented by Fi­nance Min­is­ter,’mam­phono Khaketla (pic­tured) on 22 May 2015.

This was un­like the pre­ced­ing fis­cal years when it was pre­sented in Fe­bru­ary, re­sult­ing in a marked de­lay in the im­ple­men­ta­tion of the govern­ment’s cap­i­tal projects.

“The in­dex for govern­ment ac­tiv­i­ties de­clined by 29.4 per­cent in the se­cond quar­ter of 2015 com­pared with an in­crease of 18.6 per­cent in the pre­vi­ous quar­ter,” the CBL said.

“The bud­get speech was only read in May 2015 while the Ap­pro­pri­a­tion Bill was re­leased in June 2015. Sim­i­larly, the re­ceipts from SACU (South­ern African Cus­toms Union) rev­enue pool de­clined by 5.2 per­cent in June, 2015 as per the ap­proved bud­get for the new fis­cal year, 2015/2016.”

The re­view also stated that all com­po­nents of rev­enue - tax rev­enue, grants, other rev­enue sources and SACU re­ceipts - de­clined in the quar­ter un­der re­view.

“Tax rev­enue de­clined by 13.9 per­cent in June, une, 2015 rel­a­tive to an in­creasease of 21.3 per­cent­age points in March, 2015. Taxes on in­come ncome went down by 11.8 per­centr­cent while value-added tax fell by 15.2 per­cent, a re­flec­tion ec­tion of un­der­per­for­mance nce of govern­ment ex­pen­di­en­di­ture (the main con­trib­u­tor to the na­tional onal econ­omy),” it said.

Ac­cord­ing to the re­view, Le­sotho’s in­flafla­tion rate took the cue of the sub­dued Southuth African econ­o­mymy dur­ing the pe­riod.

“SA’S in­fla­tionon rate mea­sured 4.7 7 per­cent in June ne 2015 from 4.0 0 per­cent in Marchh 2015,” the CBL said.

“Le­sotho’s in­fla­tion rate, mea­sured as a per­cent­age change in the Con­sumer Price In­dex was 2.9 per­cent in June 2015 from 2.1 per­cent in March 2015. Food and non-al­co­holic bev­er­ages, fur­ni­ture, house­hold equip­ment and rou­tine main­te­nance, trans­port, leisure, en­ter­tain­menten­terta and cul­ture, well as mis­cel­la­neous goods and ser­vices were the ma­jor driv­ers t to the up­ward trend.”

The apex bankban fur­ther noted that the con­struc­tion in­dex de­clined by 61.6 per­cent in the quar­ter endin­gend in June 2015 fol­low­ing a de­clinede­clin of 9.8 per­cent in the first quar­ter of 2015.

“The de­cline was in line with re­duced govern­ment cap­i­tal ex­pen­di­ture dur­ing the re­view quar­ter. The weak per­for­mance was a re­sult of un­sat­is­fac­tory per­for­mance by the govern­ment and con­struc­tion sub­sec­tors,” the CBL said.

The trade in­dex, which com­prises of mo­tor trade, whole­sale and retail trade in fuel, and whole­sale and retail trade was also sub­dued dur­ing the pe­riod un­der re­view. It de­clined by 2.8 per­cent in the quar­ter end­ing in June 2015 com­pared with a de­cline of 10.6 per­cent in the pre­vi­ous quar­ter.

“This is an in­di­ca­tion of lower de­mand for goods and ser­vices in the econ­omy dur­ing the re­view pe­riod,” the apex bank ob­served.

How­ever, it was not all doom and gloom, with the min­ing and man­u­fac­tur­ing sec­tors re­main­ing re­silient dur­ing the quar­ter and reg­is­ter­ing sig­nif­i­cant pos­i­tive growth rates.

“The min­ing and quar­ry­ing in­dex in­creased sig­nif­i­cantly by 28.0 per­cent in the se­cond quar­ter of 2015 com­pared with a de­cline of 12.9 per­cent in the first quar­ter of 2015,” the re­view stated.

“The in­crease in di­a­mond pro­duc­tion was at­trib­uted to in­creased pro­duc­tion by both Letšeng and Storm Moun­tain Di­a­mond mines.

“Min­ing op­er­a­tions at Letšeng di­a­mond mine re­turned back to nor­mal dur­ing the re­view quar­ter fol­low­ing dis­rup­tions due to main­te­nance works in the last quar­ter.”

The to­tal man­u­fac­tur­ing in­dex in­creased by 9.7 per­cent in the se­cond quar­ter of 2015 com­pared with a de­cline of 31.5 per­cent in the pre­vi­ous quar­ter.

Said the re­view: “The in­crease was at­trib­uted to 26.7 per­cent and 9.7 per­cent in­creases in the man­u­fac­tur­ing of tex­tiles and cloth­ing, and man­u­fac­tur­ing of food and bev­er­ages indices, re­spec­tively.”

The CBL, how­ever, noted that the per­for­mance of the tex­tile and cloth­ing firms usu­ally in­creased in the se­cond quar­ter fol­low­ing a dip in the first quar­ter.

“Thus, the re­view pe­riod’s per­for­mance is largely sea­sonal while there are also in­di­ca­tions that the sec­tor grew as a new firm started op­er­a­tions in the cat­e­gory of knit gar­ments,” it added.

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