What You Need to Know
Economists in Lesotho are urging households to adopt prudent financial management practices in response to rising living costs driven by global economic conditions. They recommend prioritizing essential expenditures and reducing non-essential spending to navigate the financial pressures caused by inflation and increased fuel prices.
Africa-Press – Lesotho. Households are encouraged to adopt prudent financial management practices- says an Economist, at the Ministry of Finance and Development Planning, Mr. Moeketsi Ntoi in an interview with the agency on Wednesday.
Mr. Ntoi said this comes as a result of the current global economic conditions due to ongoing geopolitics which have already led to the overall cost of living increasing.
Moreover, he added that the current economic conditions place pressure on already constrained household budgets.
“Because fuel prices shock will translate into higher transport costs and increased food prices, budgeting in households should be strengthened with a clear focus on prioritising essential expenditures such as food, transport, utilities and health care,” he elaborated.
He highlighted that non-essential spending should be reduced until economic conditions stabilise.
“Households should also seek to manage costs more efficiently by buying basic goods, cooking at home and avoiding unnecessary travel.
In terms of borrowing Mr. Ntoi warned individuals against borrowing to finance daily living expenditure but rather use borrowing to support income generation.
He said there is a strong possibility that interest rates may increase in response to rising inflation and regional policy monetary developments.
“Higher interest rates would increase the cost of borrowing while at the same time while also raising monthly repayments on variable rate loans,” articulated Mr. Ntoi.
He highlighted that returns on savings may improve as a result.
In another interview, a local resident, Mrs. ‘Mamabote Mabote said wages and salaries nowadays no longer match the cost of living.
She said despite meagre salaries adjustment, part of them still has to go into taxes and the pensions while basic goods cannot be afforded also on the other hand due to inflation.
She pointed out that the economic conditions have affected everyone else adversely as a result of high rate of inflation.
“The struggle is no joke, it so painful seeing many of the youths completing in institutions of higher learning yet without the jobs,” he said.
She said the government should consider altering the years of retirement for civil servants so that the youths who for one reason or another have not been able to run successful businesses should get employment.
On the same token, another local businessman, Mr. Moeketsi Nkitlane said the current economic conditions cuts across other issues such as transport sector in which he mentioned it will affect other businesses negatively.
Mr. Nkitlane warned that due to increased fuel and rising food prices there might be high rates of crime especially theft and burglary since some people may not be affording to meet their basic needs.
He said already projected fares increase may lead to a fall of the industry itself.
Lesotho is currently facing a significant external shock driven by fuel price increases.
While the government has tried to make an intervention by subsidising fuel, the effects will still be experienced across the country.
Lesotho’s economy has been significantly impacted by global economic shifts, particularly due to geopolitical tensions that have led to rising fuel prices and inflation. These factors have strained household budgets, prompting calls for better financial management practices among residents. The government has attempted to mitigate these effects through fuel subsidies, but the challenges persist, affecting various sectors and increasing the risk of social issues such as crime due to economic hardship.
