‘Budgets failing to spur growth’
SUCCESSIVE budgetary allocations have tended to be formulaic and failed to address the root causes of Lesotho’s economic underdevelopment. This was said by economist and former National University of Lesotho lecturer Dr Frank Baffoe in his analysis of the 2016/2017 financial year national budget for the parliamentary portfolio committee on the economic and development cluster.
The M17.423 billion budget was presented on 19 February 2016 by Finance Minister, Dr ‘Mamphono Khaketla, with a strong emphasis on reining in the government’s runaway expenditure and exploring new sources of revenue generation among others.
Dr Baffoe, who is also Ghana’s consular to Lesotho, said successive Finance ministers had been singing from the same hymn sheet since 2000 without dealing with the issues stymying economic growth.
“It is significant to note that since the 2000/2001 budget, every Minister of Finance has tended to caption the speech with a clarion call message, with no explanation. My guess is that these messages are meant to galvanise the nation towards political consensus. The question is: how effective have these slogans been?” he said.
For instance, Dr Baffoe said, past governments attributed the agriculture sector’s poor performance to adverse weather conditions.
However, in his view, the other causes were land tenure system as a limitation on commercial farming; nature and patterns of farming systems; livestock farming which is associated with overgrazing, leading to perennial soil erosion; lack of infrastructure to harness rain water to irrigation farming and lack of adequate skilled extension services to the rural farming population.
With regards the declining Southern African Customs Union (SACU) revenue, he said Dr Khaketla was “stating the obvious” since it had been noted by many of her predecessors.
“All past governments have recognised the precarious nature of (SACU) dependence of over 30 percent of total government revenue without definitive and effective measures to address the problem,” said Dr Baffoe.
He said the persistent shortfall in projected government revenue could be attributed to the narrow domestic tax base due to the lack of an enabling business environment for the private sector to operate and grow.
“It is only through the growth in the productive sectors, which are the domains of entrepreneurs, that the levels of company and personal taxes will grow as a result of expanding production and employment levels. Such developments will ultimately result in increasing VAT,” Dr Baffoe said.
“. . . The budget did not critically address the root causes of the poor performance of the private sector in order to make the 2016/17 budget respond effectively to them.”