Lesotho growth steady amid uncertainty

Global growth has showed moderate progress in 2025 although the intensification of protectionist policies remains at risk.

Domestically, growth is expect to be underpinned by construction-related activities in the medium term, amid growing uncertainty on the global stage.

The domestic activity was estimated to have expanded by 3.1 percent in November 2024, up from 1.5 percent in the previous month.

This was disclosed during the 111^th meeting of the Monetary Policy Committee (MPC) of the Central Bank of Lesotho.

During the meeting this week, the governor of Central Bank, Dr Maluke Letete, said the growth was primarily driven by stronger domestic demand, supported by both consumer spending and robust export growth.

Letete said despite challenges in the construction subsector, expansion was broad-based.

“Looking ahead, growth is expected to remain steady but uneven in the medium term, amid uncertainty in the export market,” he said.

However, he noted that the domestic inflation rate eased to 3.7 per cent in December 2024 from 4.4 percent in the preceding month.

This mainly reflected declining food and fuel prices in the international market, which were supported by stronger currency.

According to the MPC, broad money supply increased in the fourth quarter of 2024, driven mainly by a rise in transferable deposits held by the business sector.

The MPC said private sector credit also expanded, reflecting higher lending to both households and business enterprises.

“Government budgetary operations recorded a deficit of 4.8 percent of GDP in November 2024, driven by a decline in revenue that outpaced the reduction in expenditure.

“Meanwhile, the public debt stock as a percentage of Gross Domestic Profit rose to 56.2 percent from a revised 55.7 per cent in the previous quarter, reflecting disbursements for ongoing foreign funded projects,” the MPC recorded.

At current levels, the stock reserves provide for 4.7 months of import cover.

The NIR position is projected to remain steady and improve in the near to medium term.

Having considered the NIR developments and outlook, regional inflation and interest rates outlook, domestic economic conditions and the global economic outlook, the MPC decided to increase the NIR target floor from US$770 million to US$840 million, to ensure sufficient reserves for sustaining the one-to-one peg between the loti and the rand.

“Between the previous meeting in November and today’s sitting, the CBL’s Net International Reserves (NIR) increased by approximately US$42 million. This was mainly driven by higher SACU receipts during the review period,” the MPC said.

NIR has also made a decision to lower the CBL rate by 25 basis points to 7.25 percent annum, to align with prevailing domestic economic conditions and the broader regional monetary policy environment.