Africa-Press – Lesotho. The Central Bank of Lesotho (CBL) Monetary Policy Committee (MPC) says the local economy’s growth remains uncertain owing to multiple developments. The recent lootings in the neighbouring
South Africa and the resurgences of the new Covid-19 variants coupled with global economic perspectives which remain “uneven” do not bode well for the
country, the MPC has said. This the committee said at its 90th meeting review last Tuesday. The MPC further mentioned that the domestic labour market conditions “remained weak”
during the first quarter of 2021 and this is attributed to the induced Covid-19 lockdown restrictions. It also highlighted that the rate of inflation in Consumer Price Index (CPI) was
sitting at 6.0 percent in June while it was 6.9 percent in May both for this year. According to the Committee, food, electricity, gas and other fuels and transport
components are said to be the “largest” contributors to the June inflation. The meeting convened to “review recent economic developments and determine the adequacy of
monetary targets”. “… although some signs of recovery are starting to emerge, global economic growth prospects remain uneven and clouded by the uncertainty surrounding possible
resurgence of the virus and emergence of new variants, and the roll-out of vaccines at the country level. “Domestically, any prospects for growth have to be weighed against existing uncertainties.
Risks to the domestic economic outlook include the possible spread of Covid-19 and the effectiveness of the infection control measures, exposure to international
economic developments, domestic structural rigidities and policy uncertainty,” said the CBL Governor Dr Retšelisitsoe Matlanyane. She further took stock of the international, regional and domestic economic developments
along with the financial markets’ conditions. On the basis of the aforesaid, the bank had decided to decrease the Net International Reserve (NIR) from US$800 million, approximately M12 billion to US$780 million
equivalent to M11,5 billion. “At this level, the NIR target remains consistent with the maintenance of the exchange rate peg between the loti and the South African
rand,” the CBL noted. The Committee also maintained the CBL rate at 3.50 percent per annum. This move according to the Committee will ensure that the domestic cost of funds
remains at par with the rest of the region. “Since the 89th MPC meeting of May 24, 2021, there has been a general pickup in global demand. This has been accompanied by improvements in rates of vaccination and
increased policy support. However, global growth prospects in the near-term remain uncertain and uneven across countries. “Growth remains vulnerable to new mutations of the
virus, vaccine availability and lack of uniformity in rates of country vaccinations. Further downside risks include global trade tensions, limited policy space and possible tightening
of containment measures as infections rise,” said the Governor. “The Committee will continue to monitor the global developments and their likely impact on domestic macroeconomic conditions, especially the CBL’s net international reserves (NIR), with the aim of taking corrective action when needed.”
