Africa-Press – Lesotho. The Central Bank of Lesotho (CBL)’s Monetary Policy Committee (MPC) in its 89th meeting on May 24, 2021 said the domestic economic recovery is ‘conditional’ on the developments around the Covid-19 containment measures and the immunisation campaign.
“The domestic economic recovery remains largely conditional on developments related to potentially stronger and prolonged rise in virus infections, Covid-19 containment measures and the rollout of vaccines.
The CBL Governor Dr.
Retšelisitsoe Matlanyane said during the first quarter of this year, the domestic labour market conditions were sluggish in the three sectors which are monitored by the bank.
She attributed this weakness to the Covid-19 induced restrictions which the government imposed earlier this year to arrest the surge of new infections.
The Governor went on to show that, the inflation rate which is measured annually, had the percentage change in Consumer Price Index (CPI) sitting at 6.7 percent in April 2021, compared to 6.5 percent in March the same year.
These increase, she said was on account of food and non-food components within the CPI basket. “The broad measure of money supply (M2) declined by 1.3 per cent in the first quarter of 2021, from an increase of 9.9 per cent in the previous quarter.
The decrease was due to a 4 per cent growth in total banking sector net domestic assets, which was moderated by a 0.8 per cent rise in the sector’s net foreign assets. Private sector credit extended by banks fell by 0.1 per cent in quarter one, after contracting by 0.5 per cent in the fourth quarter of 2020.
“Loans and advances extended to business enterprises increased by 1.1 per cent in quarter one, compared to a 3.1 per cent decline realized in the fourth quarter of 2020.
Conversely, total credit granted to households fell by 0.5 per cent in quarter one, relative to an increase of 0.5 per cent in the quarter ending December 2020,” Dr Matlanyane has said.
The committee said that the current account recorded a surplus equivalent to 1.1 percent of the Gross Domestic Product (GDP) during the first quarter of the year, an improvement from 1.8 percent deficit recorded in the previous quarter.
It further said the improvement in the current account was motivated by the trade and income accounts performance. The gross international reserves, as measured in months of import cover, rose to 4.5 months in the first quarter of 2021, compared to 4.3 months in the last quarter.
Dr. Matlanyane said the government budgetary operations showed a fiscal deficit to 9 percent of the GDP during the first quarter of this year and the fiscal surplus has been revised to 12.9 percent of the last quarter’s GDP in 2020. The Governor further showed that: “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.
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