EU sus­pends bud­get sup­port

Lesotho Times - - Front Page - Bereng Mpaki

The euro­pean Union ( eu) has de­cided not to dis­burse 26.85 mil­lion euros (about M460.65 mil­lion) meant to sup­port Le­sotho’s na­tional bud­get.

The Union noted in a state­ment re­leased yes­ter­day that this de­ci­sion was taken “af­ter care­fully as­sess­ing Le­sotho’s com­pli­ance with the con­di­tions for pay­ment, lead­ing to the con­clu­sion that in­suf­fi­cient progress has been made in the im­ple­men­ta­tion of the agreed pol­icy re­forms, es­pe­cially in the area of Pub­lic Fi­nan­cial Man­age­ment.”

How­ever, the EU reaf­firmed its com­mit­ment to­wards as­sist­ing Le­sotho in mak­ing the nec­es­sary re­forms and qual­i­fy­ing for sup­port “at a later stage”.

The state­ment con­tin­ued: “The eu re­mains com­mit­ted to en­sur­ing ef­fec­tive as­sis­tance to the govern­ment’s re­newed re­form ef­forts, and thus to its aim, to qual­ify at a later stage, for Bud­get Sup­port. For this pur­pose, the eu has re­cently launched a large pack­age of tech­ni­cal as­sis­tance in the area of Pub­lic Fi­nan­cial Man­age­ment.

“The present de­ci­sion will not im­pact the over­all en­ve­lope of €142 mil­lion for eu de­vel­op­ment aid to Le­sotho un­der the 11th euro­pean De­vel­op­ment Fund (2014-2020), which in­cludes sup­port in the ar­eas of gov­er­nance, wa­ter and en­ergy.”

The state­ment fur­ther in­di­cated that Bud­get Sup­port is “sub­ject to the ful­fill­ment of gen­eral el­i­gi­bil­ity cri­te­ria laid down in fi­nanc­ing agree­ments be­tween the Govern­ment of Le­sotho and the eu”.

The el­i­gi­bil­ity cri­te­ria, the state­ment ex­plained, is based on “sat­is­fac­tory progress with the im­ple­men­ta­tion of, no­tably: the Na­tional Strate­gic De­vel­op­ment Plan (NSDP), the pro­gramme to im­prove Pub­lic Fi­nan­cial Man­age­ment, trans­parency and over­sight of the state bud­get, as well as the main­te­nance of a sta­bil­ity-ori­ented macroe­co­nomic pol­icy”.

In early 2015, the eu re­quested govern­ment to sub­mit ad­di­tional sup­port­ing doc­u­ments “to demon­strate sub­stan­tive progress” on el­i­gi­bil­ity for Bud­get Sup­port for the peri- od 2014 -2015.

“An ini­tial anal­y­sis had con­cluded with a neg­a­tive as­sess­ment con­cern­ing the el­i­gi­bil­ity con­di­tions. In or­der to give the Govern­ment an op­por­tu­nity to act, an ad­di­tional five months were granted to demon­strate real progress in the im­ple­men­ta­tion of re­forms,” the eu state­ment ex­plained.

“An eval­u­a­tion of the doc­u­ments sub­mit­ted by the govern­ment to the eu has now con­cluded that the el­i­gi­bil­ity con­di­tions for Bud­get Sup­port have not been com­plied with due to the in­suf­fi­cient progress made in the im­ple­men­ta­tion of re­forms. The eu will there­fore de-com­mit the funds re­lat­ing to the on­go­ing Bud­get Sup­port pro­grammes.

“No new Bud­get Sup­port pro­grammes will be de­vel­oped for the time be­ing. how­ever, the eu re­mains a com­mit­ted de­vel­op­ment part­ner for Le­sotho and will con­tinue to en­sure ef­fec­tive sup­port to the Govern­ment’s ef­forts to­wards re­gain­ing el­i­gi­bil­ity for Bud­get Sup­port.

“For this pur­pose, the eu has re­cently launched a large pack­age of tech­ni­cal as­sis­tance to sup­port Pub­lic Fi­nan­cial Man­age­ment. The EU is con­fi­dent that this sup­port, to­gether with the com­mit­ment ini­ti­ated by the Govern­ment, will lead to a more pos­i­tive en­vi­ron­ment for Bud­get Sup­port in the fu­ture”.

Asked about the im­pli­ca­tions of the eu de­ci­sion, Fi­nance Min­is­ter Dr ‘Mam­phono Khaketla told the Le­sotho Times: “I am yet to fully un­der­stand the im­pli­ca­tions of the let­ter, but the most im­por­tant thing is to note that the de­ci­sion by the euro­pean Union will not have any im­pact on the cur­rent bud­get be­cause we had not made any pro­vi­sions for their funds in the bud­get.”

On the “in­suf­fi­cient progress” made on pub­lic fi­nance man­age­ment re­forms, Dr Khaketla said she did not agree with what the eu said both in the press re­lease and let­ters sent to her by the am­bas­sador.

“It is some­thing that I do not want to agree with, so we are yet to sit down with the euro­pean Union to dis­cuss how they ar­rived at this con­clu­sion,” Dr Khaketla said.

Fi­nance Min­is­ter Dr ‘Mam­phono Khaketla.

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