the task at hand is clear
THE latest Fitch outlook on Lesotho’s economy holds very little surprises for any observer of local current affairs. In fact, it by and large reiterates what many global agencies have posited about the economy’s performance.
As reported in this edition, Fitch revised downwards the country’s long-term foreign currency Issuer Default Rating (IDR) from ‘BB-’ to ‘B+’ status. The long-term local currency IDR was also revised downwards from ‘BB’ to a ‘BB-’ status.
Among the reasons for the downgrade are the declining South African Customs Union (SACU) revenues and the slowdown in regional hub, South Africa’s economy. The effect of dwindling SACU revenues was the continued decline in public finances resulting in a widening fiscal deficit. The agency also notes that the unsustainably high government wage bill was also taking its toll on the economy’s performance.
However, the havoc political instability was wreaking on the economy is certainly the major take home from Fitch’s outlook. The agency notes that political tensions were complicating any policy response to the growing fiscal deficit. In essence, the continued ruckus was crippling the government’s attempts to redress some of the challenges the economy is facing.
Fitch also states that the political tension had negatively affected investment, consumption and confidence as well as retarded the implementation of the National Strategic Development Plan. Resultantly, gross domestic product (GDP) growth and potential external financial support from the international community were also depressed.
Despite spirited attempts by some to dismiss the negative effects of the instability on Lesotho’s advancement, the Fitch outlook is yet another compelling message to the contrary.
We are certainly living in tough times, and all these challenges require a government and opposition focused on the task of alleviating the people’s suffering and not at each other’s throats. An all hands on deck approach is the remedy Lesotho needs to not only emerge from this difficult period, but also become a major economic player.
For Lesotho to create a prosperous and sustainable economy, there is an urgent need for economic transformation. It is thus incumbent for the government, private sector, workers, media and civil society to play mutually reinforcing roles.
Another critical stakeholder in assisting Lesotho’s advancement are development partners. In all fairness, our development partners have given us ample opportunities to address the governance concerns they have raised. Given what Lesotho stands to lose from the suspension of aid, this is an opportunity we can ill-afford to miss.
It, thus, does not require a rocket scientist to decipher that ensuring peace and tranquillity should rank highly among the government’s priorities. This entails avoiding needless antagonism with different stakeholders in the country’s body politic such as the opposition or any other perceived foes. The poisonous politics of us and them needs to be done away with as a matter of urgency. After all, we all should be pulling in the same direction to attain the aspirations of the long suffering populace.
According to Fitch, Lesotho would need to drastically improve its business environment and political stability as well as ensure the diversification in the economy to ensure a positive rating action.
What that means is that the fundamentals need to be addressed before any drives by the government to solicit foreign and domestic investment can bear meaningful fruits. Only under a progressive political framework can the economic policy and institutional changes needed to build the economy be effected. In a thriving economy, citizens see the folly of fighting each other and focus on exploiting the economic opportunities before them. However, if poverty and deprivation remain the order of the day, unrest will continue to the detriment of economic development.
That is why we belabour the point that Lesotho has an opportunity, with the Phumaphi SADC Commission of Inquiry report, to slay the spectre of instability once and for all by implementing its recommendations.