Lesotho’s debt growing rapidly

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By Teboho Serutla

The minister of finance, Thabo Sophonia, says the Debt Sustainability Assessment (DSA) has highlighted the rapid increase in the country’s debt levels over the past three years.

Delivering the 2021/2022 budget in parliament today, Sophonea said the total publicly guaranteed debt stood at M19.6billion at the end of January 2021, with the external debt reaching M15.1 billion and a domestic debt standing at M4.5billion.

He said the three-year rapidly rising debt, particularly on the domestic side is driven mainly by persistent high consistent depreciation of the Lesotho Loti against the major external currencies in Lesotho’s debt portfolio such as the US Dollars, the British Pound Sterling and the Euro including the Special Drawing Rights.

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The country’s total debt to GDP reached 58.1 percent, while the external debt to GDP reached 45 percent with the domestic debt making the remaining 13.1 percent of GDP.

“The recent DSA assesses Lesotho’s risk of overall and external debt distress at moderate level despite the impact of COVID-19 shock but risks to debt sustainability have risen, pointing the to the importance of building economic buffers to reduce external shocks and maintaining a conservative approach to new borrowing.

“The careful vetting of new investment projects is recommended to ensure that borrowing is directed to combatting the spread of COVID-19 while the acquisition of the virus vaccine is prioritised, and also stimulating the economy from the effects of COVID-19.” 

FULL BUDGET SPEECH

2021_-22-Budget-Speech-17-Feb-2021