Countries of the World/COUNTRYS.BIN/dp/0217/02174.txt

Text File | 1991-06-25 | 16KB | 322 lines

$Unique_ID{COW02174}
$Pretitle{400}
$Title{Lesotho
The Lesotho Economy.}
$Subtitle{}
$Author{Ministry of Information and Broadcasting}
$Affiliation{Embassy of Lesotho, Washington DC}
$Subject{lesotho
year
percent
bank
energy
growth
government
increase
domestic
fuel}
$Date{1988}
$Log{Weaving*0217402.scf
Craftsperson*0217403.scf
Table 4.*0217401.tab
Table 4.*0217402.tab
Table 5.*0217403.tab
Table 6.*0217404.tab
Table 7.*0217405.tab
}
Country:     Lesotho
Book:        Lesotho - Facts and Figures 1987/88
Author:      Ministry of Information and Broadcasting
Affiliation: Embassy of Lesotho, Washington DC
Date:        1988

The Lesotho Economy.

[See Weaving: Courtesy Embassy of Lesotho, Washington DC]

     After the low growth of 1.6 percent in 1985, real Gross Domestic Product
(GDP) grew considerably by 5.8 percent in 1986 notably as a result of the
strong recovery in the manufacturing, building and construction and wholesale
and retail trade sectors. Although the performance of the domestic economy
showed a further improvement in 1987, there was only a marginal growth in the
building and construction sector while growth in the public administration
actually slowed down. Consequently, preliminary estimates for that year point
to a slightly lower growth of 4.7 percent in real GDP. Following its
unsatisfactory performance in 1986 on account of unfavourable weather
conditions, agriculture, the largest single activity in the economy, showed a
marked recovery in 1987, mainly in the area of crop production, and
contributed significantly to GDP growth. Gross National Product (GNP) is also
estimated to have grown, in real terms, by 0.7 percent in 1987 compared to
0.8 percent in 1986.

     With regard to the government's financial performance in the fiscal year
1987/88 (April to March), there are clear indications that the position will
deteriorate even further than in the previous year. While total expenditure is
expected to show a considerable nominal increase, total receipts will,
unfortunately be lower than in the preceeding year. Despite some nominal
growth in Customs revenue (the largest revenue item), recurrent revenue is
anticipated to increase only marginally while grants will be less than one
half of the 1986/87 figure. The tighter financial position of the government
is expected to result in a higher budget deficit than in the year before. To
finance the deficit, the government has borrowed heavily from both domestic
and foreign sources with a higher proportion of the borrowed funds coming
from the domestic market. Regrettably, the increased government deficit has
had serious implications for the country's net foreign assets which declined
in 1987.

     Preliminary balance of payments figures for 1987 indicate that there was
further deterioration in both the current account and the overall balance.
Although export earnings increased considerably, mainly as a result of the
rapid expansion of manufactured goods, the increase was still grossly
inadequate to offset the rise in imports.

     Consequently, the current account has weakened still further and the
deficit is expected to be twice that of 1986. The rise in imports has been
mainly financed by higher government borrowing abroad and increase in migrant
workers' remittances, coupled with a drawdown of foreign exchange reserves.
The stagnation in unrequited transfers because of a drop in SACU compensation
payments, and the lower interest earnings of the banking system on account of
the fall in interest rates in South Africa were other major adverse
developments. The overall balance continued to weaken resulting in a further
decline in the net foreign assets of the banking system.

     Money supply increased at a slower rate in 1987 than in 1986 with its
components, maloti in circulation and deposits, reversing their growth trends
of a year earlier.

     While there was a slowdown in the growth of maloti in circulation in
contrast to the accelerated growth of the previous year, deposits, by far the
larger of the two components, increased much faster than in 1986. The low
overall growth in money supply can be ascribed to the net foreign exchange
outlaws during the year.

     Total domestic credit continued to grow rapidly. However, much of the
growth that occured can be attributed to the substantial increase in net
claims on the government. It is a matter of concern that the government
continues to take the lion's share of domestic credit as most of these funds
go into financing its rising budget deficit. Credit to the private sector also
showed a considerable increase while credit to statutory bodies declined for
the second consecutive year. As in the year before, because of the decline in
the country's net foreign assets, the increase in bank deposits was lower than
the rise in domestic credit. Consequently, there liquidity of the banking
system showed a further appreciable decline.

     Interest rates in Lesotho continued to be influenced by developments in
the South African money markets. They remained stable throughout the year,
though they were negative in real terms. The inflation rate, which was low at
the beginning of the year, rose to a peak by mid - year but dropped towards
the year-end.

     The drop is largely attributable to the exemption, during the course of
the year, of certain basic commodities from sales tax and the appreciation of
the rand, hence the maloti, against the U$ dollar. The exemptions have
produced some desired results in that the burden of commodity tax
on the poor was alleviated as evidenced by the lower increase in the level of
prices facing the low income households.

     Prospects for 1988 could be brighter than in 1987. A lot, however, will
depend on developments in the agricultural sector. Although soft soaking rains
fell at the beginning of the 1987/88 summer crop season, they were followed
by exceptionally heavy rains that wreaked havoc throughout the entire
sub-region. If heavy rains persist, summer crops, particularly beans, will be
damaged and crop production could be considerably reduced. Livestock
production, on the other hand, could benefit tremendously from improved
grazing after the heavy rains. The strong growth in trade and industry is
expected to continue provided that an adequate flow of bank credit to these
activities is maintained and private investment is increased.

     Lesotho highland Water Project is expected to provide the impetus for
increased economic activity in the country.

Source: Central Bank of Lesotho: Annual Report for 1987.

[See Table 4.: GDP, GNP and Per Capita Income at Constant 1980 Prices]

[See Table 4.: Percent Change from the Previous Year]

[See Table 5.: GDP by Economic Activity]

EMPLOYMENT:

[See Craftsperson: Courtesy Embassy of Lesotho, Washington DC]

     Statistics on the sectoral distribution of employment available are for
the 1985/86 Labour Force Survey ( LFS ) and 1986 population census.

     The total working age population, defined as persons aged 12 years and
above was estimated at 923,048. The preliminary results indicated that 484,115
or 52.4 percent of the working population were female. The total labour force
( employed and unemployed ) was estimated at 514,704 persons of whom 34.9
percent were female.

     Total employment amounted to 396,192 persons of whom 133,982 or 33.8
percent were female. The female labour force rose from 137,653 in 1976 to an
estimated 179,609 in 1985. Unemployment has assumed very serious proportions
in Lesotho. According to preliminary results of the LFS the number of
unemployed persons was estimated at 118,512 of whom 45,627 or 38.5 percent
were female.

     Government is the largest employer and it is estimated that the number of
civil servants increased by 12.8 percent to about 20,140 during 1987,
constituting about 5 percent of the domestic labour force. This is exclusive
of daily rated employees.

     Lesotho National Development Corporation with its 60 firms employed
7,994 persons repr