In­sta­bil­ity the bane of our econ­omy

Lesotho Times - - Leader -

AS re­ported else­where in this edi­tion, fore­casts by the cen­tral Bank of Le­sotho and In­ter­na­tional Mon­e­tary Fund (IMF) are point­ing to a down­ward tra­jec­tory for the econ­omy in 2016. The causes of the bleak eco­nomic out­look are many, and in­clude global eco­nomic de­vel­op­ments that are be­yond the con­trol of pol­i­cy­mak­ers in the Moun­tain King­dom.

the tum­bling of the South African rand, on which the loti is pegged, has re­sulted in in­creases in the prices of goods and ser­vices. the rand, and other African cur­ren­cies have fallen to record lows due to the eco­nomic slow­down in china — which is Africa’s big­gest trad­ing part­ner. the IMF has in re­cent months sharply cut its pro­jec­tions for the con­ti­nent. credit rat­ing agen­cies have also down­graded or low­ered their out­look on com­mod­ity ex­porters such as Le­sotho.

Added to that is the el nino-in­duced drought which has dras­ti­cally re­duced the farm­ing sea­son, leav­ing many Ba­sotho food in­se­cure and need­ing food aid. the im­pli­ca­tions of the drought, which is said to be the worst in decades, will only be seen over the course of the year. Ad­mit­tedly, the afore­men­tioned chal­lenges are by no means unique to Le­sotho, but plague the rest of the south­ern African re­gion and be­yond.

How­ever, in its state­ment, the IMF pointed out ar­eas of con­cern which are unique to Le­sotho and bog­ging down the Moun­tain King­dom’s so­cio-eco­nomic ad­vance­ment. In ad­di­tion to call­ing on the govern­ment to re­duce its ex­pen­di­tures which amounted to 60 per­cent of gross do­mes­tic prod­uct (GDP), the IMF warned of the fur­ther weak­en­ing of the busi­ness en­vi­ron­ment due to peren­nial political in­sta­bil­ity.

the global agency noted that the con­tin­ued political ten­sion in Le­sotho was neg­a­tively af­fect­ing eco­nomic per­for­mance, with the rip­ple ef­fect of low­er­ing in­vest­ment, con­sump­tion and con­fi­dence. Con­se­quently, the im­ple­men­ta­tion of the na­tional Strate­gic De­vel­op­ment Plan (NSDP) has stalled while the coali­tion govern­ment re­mains in fire­fight­ing mode to fend off its per­ceived en­e­mies.

the IMF fur­ther warned that con­tin­ued political tur­moil would not only af­fect macroe­co­nomic sta­bil­ity and gross do­mes­tic prod­uct growth, but also sti­fle ex­ter­nal fi­nan­cial sup­port from the in­ter­na­tional com­mu­nity. there can­not be a louder clar­ion call for our lead­ers across the political di­vide than this. the warn­ings put out by the IMF and other global eco­nomic agen­cies can no longer be ig­nored. It is as clear as day that the cur­rent tra­jec­tory will yield a har­vest of thorns.

the chal­lenges be­fore this na­tion are many. the IMF re­port also notes that most health, education, and so­cial in­di­ca­tors have shown lit­tle or no im­prove­ment since a decade ago, with poverty and un­em­ploy­ment rates re­main­ing high. How­ever, such chal­lenges can only be re­solved by a change of at­ti­tude and ap­proach. Af­ter all, the pur­pose of any govern­ment is to pro­mote eco­nomic growth and pros­per­ity for its elec­torate. the first port of call in un­tan­gling Le­sotho from the web of political in­sta­bil­ity is for the govern­ment to pub­lish Jus­tice Mpa­phi Phumaphi’s re­port into the killing of for­mer army com­man­der Maa­parankoe Ma­hao.

While the re­port’s rec­om­men­da­tions might be a bit­ter pill to swal­low, its pub­li­ca­tion would be a pos­i­tive sign to the rest of the world that the govern­ment is pre­pared to go to un­com­fort­able lengths to en­sure the na­tion’s progress. By tack­ling the re­port, the govern­ment will be able to fi­nally fo­cus on im­ple­ment­ing the NSDP and ad­dress the press­ing needs fac­ing this na­tion.

How­ever, if the ten­sion con­tin­ues, the unity of the seven-party coali­tion govern­ment can­not be guar­an­teed as it will be vul­ner­a­ble to in­ternecine con­flicts. In an un­sta­ble political en­vi­ron­ment, politi­cians will al­ways be plot­ting to un­seat the in­cum­bent govern­ment.

Ul­ti­mately, Le­sotho can­not pre­tend to be able to ad­dress its chal­lenges on its own. We need the fi­nan­cial and tech­ni­cal as­sis­tance of the re­gional bloc and de­vel­op­ment part­ners to get out of this log­jam. this can only hap­pen if peace and sta­bil­ity reign in this na­tion.

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