Category: APO-OPA

MASERU, Lesotho, June 6, 2014/African Press Organization (APO)/ — On June 4, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the Kingdom of Lesotho. 1

Since 2010, the economy has been performing well with growth of real Gross Domestic Product (GDP) averaging over 5 percent a year and inflation held to single-digit levels. International reserves have recovered to close to 5 months of import coverage after dipping to 3½ months of imports in 2012 in the wake of the balance of payments and fiscal crisis caused by the sharp drop in revenues from the Southern African Customs Union (SACU) in fiscal years 2010/11 and 2011/12. The recovery from the crisis was achieved with the help of a sustained fiscal adjustment effort supported by the IMF with a three-year arrangement under the Extended Credit Facility (ECF), which was successfully concluded in September 2013.

The economic outlook for Lesotho is positive with strong economic growth and low inflation. Economic activity is expected to be supported by large public investment projects, including the second phase of the Lesotho Highland Water Project. The authorities are also taking steps to strengthen the role of the private sector. However, there are risks, most notably from the high volatility of SACU revenues.

Despite the recent strong growth, unemployment remains high and poverty is widespread, while some social indicators on primary and secondary education and HIV/AIDS highlight the future challenges.

In the near term, the authorities are faced with the issue of domestic tax performance. In 2013/14, the domestic tax revenue experienced a shortfall of 4 percent of GDP and resulted in the overall fiscal deficit of more than 1 percent of GDP, compared with a strong surplus the previous year. On the spending side, Lesotho is faced with an extraordinarily high government wage bill—the highest in sub-Saharan Africa (relative to GDP)—which to some extent crowds out public investment projects needed to promote inclusive growth under the National Strategic Development Plan (NSDP).

Executive Board Assessment2

Executive Directors commended Lesotho’s robust economic growth with moderate inflation, and welcomed the recovery of international reserves on the back of a period of fiscal adjustment. The outlook is positive, but the economy faces risks from the volatility of revenues from the Southern African Customs Union, while unemployment remains high and poverty widespread. A strengthening of fiscal policies and stepped up reform implementation will therefore be needed to enhance resilience and promote private sector-led inclusive growth.

Directors saw a need for a tighter fiscal stance consistent with maintaining an adequate level of international reserves and creating space for priority social and capital spending. They encouraged the authorities to improve revenue administration and tax policy, including in mining, and to contain recurrent expenditure, notably the wage bill. In this regard, Directors urged completion of the ongoing pilot payroll audits and extension of the exercise to the entire civil service while strengthening control over hirings. They also encouraged the authorities to step up public financial management reforms.

Directors noted that substantial financing will be needed for the second phase of the Lesotho Highlands Water Project, and encouraged the authorities to pursue a prudent debt policy to ensure sustainability. They recommended prompt submission of the new public debt management bill to parliament.

Directors observed that the loti’s peg to the South African rand has successfully anchored Lesotho’s macroeconomic stability. They encouraged the authorities to consider moving toward a transparent and predictable rules-based fiscal framework, which, in addition to maintaining a sufficient stock of international reserves to secure the peg, would further reduce risks.

Directors welcomed the soundness of the banking sector. They emphasized the need for financial sector deepening to enable private sector-led growth, and recommended further strengthening the regulatory and supervisory framework, including effective cross-border supervision with South Africa, and establishing a functional credit reference bureau. Implementation of the Financial Sector Development Strategy will be important in this regard.

Directors encouraged the authorities to step up implementation of the National Strategic Development Plan to improve the business climate, raise competitiveness, and promote broad-based growth and poverty reduction.

Lesotho: Selected Economic Indicators, 2010/11–2013/14 1

2010/11 2011/12 2012/13 2013/14

Act. Act. Act. Prel.

(Percentage changes; unless otherwise indicated)

National account and prices

GDP at constant prices

6.0 3.8 6.7 5.4

GDP deflator

4.6 7.4 1.7 7.6

GDP at market prices

(Maloti millions)

16,455 18,330 19,893 22,556

Consumer prices (average)

3.4 6.0 5.6 5.0

External sector

Terms of trade (deterioration -)

4.0 9.1 -9.5 0.7

Average exchange rate

(Local currency per U.S. dollar)

7.2 7.4 8.6 9.6

Nominal effective exchange rate change (– = depreciation) 2

4.0 -7.1 -14.4 -11.5

Real effective exchange rate (– = depreciation) 2

5.4 -3.6 -12.1 -9.3

Current account balance

(Including official transfers, percent of GDP)

-7.5 -9.0 -2.7 -1.0

(Excluding official transfers, percent of GDP)

-29.3 -29.0 -36.6 -32.7

Gross international reserves

(Months of imports) 3

4.0 3.6 4.6 4.8

(Percent of M1)

144 139 179 160

Money and credit

Domestic credit to the private sector

26.9 25.1 42.2 20.0

Broad money

1.1 5.0 6.1 24.9

Interest rate (percent) 4

3.2 2.8 2.4 2.3

(Percent of GDP; unless otherwise indicated)

Savings and investment

Gross capital formation 5

29.0 34.9 35.6 33.3

Public

12.2 20.0 20.7 18.4

Private

15.1 14.6 14.6 14.5

National savings

21.5 25.9 32.8 32.3

Public

5.8 10.2 24.7 16.7

Private

15.8 15.8 8.1 15.6

Public debt

34.9 37.6 39.7 41.9

External public debt

30.2 31.5 36.5 39.0

Domestic debt

4.8 6.1 3.2 2.9

Central government fiscal operations

Net lending/borrowing

-5.0 -10.6 5.0 -1.2

(Excluding grants)

-12.3 -18.4 -3.6 -6.6

Non-SACU fiscal balance 6

-20.2 -23.5 -20.7 -23.4

Revenue

52.0 52.5 66.1 58.9

Of which: grants

7.3 7.8 8.6 5.3

Expenses

45.3 47.4 44.1 45.5

Nonfinancial assets

11.7 15.7 17.1 14.6

Sources: Lesotho authorities and IMF staff estimates and projections.

1 The fiscal year runs from April 1 to March 31.

2 IMF Information Notice System trade-weighted; end of period. For 2013/14 it is the latest observation as of October 2013.

3 Reserve coverage of 5 months of imports is estimated as adequate for maintaining the exchange rate peg and providing a fiscal cushion to avoid abrupt adjustment.

4 12-month time deposits rate. The 2013/14 interest rate is as of end-December 2013.

5 Excluding changes in inventories.

6 Excluding externally financed capital project.

1 Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

2 At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.

OTTAWA, Canada, June 6, 2014/African Press Organization (APO)/ — “Canada condemns in the strongest terms today’s terrorist attack in northeastern Nigeria, which has killed and injured scores of defenceless civilians, including women and children.

“This was a cowardly attack carried out by the terrorist group Boko Haram, which has been unleashing unspeakable forms of violence and terror on the citizens of Nigeria. This causes us great concern, and we call for this violence to cease immediately.

“On behalf of all Canadians, I offer our sincere condolences to the families and friends of those killed and wish a speedy recovery to those who were injured.”

On December 24, 2013, Canada listed Boko Haram as a terrorist organization. Canada’s Criminal Code criminalizes membership in Boko Haram, as well as the transfer of money to support it.

LONDON, United-Kingdom, June 5, 2014/African Press Organization (APO)/ — Nigerian Foreign Minister to attend meeting with neighbouring countries in London on 12 June to discuss tackling Boko Haram.

The Foreign Secretary William Hague will host the London Ministerial on Security in Northern Nigeria on 12 June in the margins of the World Summit on Ending Sexual Violence in Conflict. This will bring together Nigeria, represented by its Foreign Minister, its neighbours Benin, Chad, Cameroon and Niger with the UK, US, France, Canada and the EU to continue the coordination necessary to defeat Boko Haram. It follows the Paris summit on Boko Haram on 17 May. As well as taking forward agreements made in Paris, the meeting will consider what can be more done both to improve regional coordination, and on economic and social development to counter the threat of Boko Haram.

The Foreign Secretary said:

“Since the appalling abductions of over 200 school girls in Chibok by Boko Haram, the international community has worked together closely to support Nigeria in the fight against terrorism.

“We have already reached agreements on intelligence sharing; coordinated border patrols; developing a regional Counter Terrorism strategy; and wider action, including supporting the victims of sexual violence and the empowerment of women and girls. This coordinated action has sent a powerful message of intent.

“The London Ministerial on Security in Northern Nigeria will build on these agreements and consider further options to combat terrorism in Northern Nigeria. This shows the determination of those in the region, with the support of the international community, to defeat Boko Haram. We continue to work through our close international coordination on the ground in Nigeria to help secure the release of the abducted school girls.

“It is appropriate that this meeting is taking place within the Summit I’m hosting on Ending Sexual Violence in Conflict. The appalling abduction of the Nigerian school girls underlines the dreadful risk posed to women and girls in conflict and why we are mobilising the world to tackle sexual violence in conflict.”

The Prime Minister said today at a joint press conference with Barak Obama at the G7 meeting in Brussels:

“In the longer term, we stand ready to provide more practical assistance to help the Nigerians and the region to strengthen their defence and security institutions and to develop the expertise needed to counter these barbaric extremists.”

TOKYO, Japan, June 5, 2014/African Press Organization (APO)/ — 1. The Government of Japan regards the election of H.E. Mr. Abdel-Fattah El-Sisi to the new President of Egypt by the result of the presidential election conducted from May 26 to 28, 2014…

BERLIN, Germany, June 5, 2014/African Press Organization (APO)/ — Foreign Minister Frank-Walter Steinmeier issued the following statement in light of the recent brutal attacks in Nigeria:
We condemn the acts of terror committed by Boko Haram in Nige…

BRUSSELS, Kingdom of Belgium, June 5, 2014/African Press Organization (APO)/ — The holding of the presidential elections marks an important step in the implementation of the constitutional roadmap towards the transition to democracy in Egypt. The Eur…

ABUJA, Nigeria, June 5, 2014/African Press Organization (APO)/ — The propensity for Boko Haram’s violence to be motivated by revenge, combined with the probable latent strike capability of the group in other parts of Nigeria and the wider region, could mean that an ‘all-out’ war against Boko Haram would result in terrorist (and other) violence in previously untouched states of Nigeria and countries of the sub-region. This could potentially further destabilize neighbouring countries with existing precarious internal balances, which could potentially worsen security in Nigeria.

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“Boko Haram has failed to present a workable alternative to the current system of governance. Furthermore, they have shown a wanton disregard for the lives and property of the very people they claim to want to govern. The real issues are: (1) how long it will take to stop the violence , and (2) how many lives and countries they will be allowed to destroy before they are stopped, for these reasons the strategy chosen to defeat them must be selected carefully” says Adunola Abiola, founder of Think Security Africa (http://www.thinksecurityafrica.org).

Boko Haram’s attacks continue to detract attention and resources away from the socio-political problems in Nigeria that have made the establishment of groups such as Boko Haram possible. Consequently Nigerian and international efforts to end the Boko Haram insurgency must prioritise containment, and pursue concepts of operations designed to protect civilians, boost local force protection, and decrease the ability of Boko Haram to maneuver nationally and regionally. Adopting a retaliatory force posture will likely replicate the outcome of the 2009 crackdown on Boko Haram, where it suffered heavy fatalities, but was still able to regroup and unleash an unprecedented and dispersed campaign of violence against Nigerians.

The Think Security Africa document on National Security in Nigeria is available at: http://thinksecurityafrica.org/research/national-security-in-nigeria. It was originally written in 2011 and has been downloaded fully and partially over 16,000 times.

Distributed by APO (African Press Organization) on behalf of Think Security Africa (TSA).

Media contact: Joel Tavon

Email: info@thinksecurityafrica.org

Tel: +44 207 287 0008

About Think Security Africa (TSA)

Think Security Africa (TSA) (http://www.thinksecurityafrica.org) is an independent think tank specializing in security in Africa. The core mission of TSA is to improve understanding of security in Africa, and engage in objective research into the causes and potential solutions to insecurity across Africa. TSA’s resources are used by governments, inter-governmental organizations, journalists and business to assist with their Africa-focused missions.

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BERLIN, Germany, June 5, 2014/African Press Organization (APO)/ — Foreign Minister Frank-Walter Steinmeier issued the following statement this evening (4 June), after meeting with the Sudanese Foreign Minister, Ali Karti:
We also spoke about the cas…

NEW YORK, June 5, 2014/African Press Organization (APO)/ — United Nations Secretary-General Ban Ki-moon today announced the appointment of Antonio Vigilante of Italy as his Deputy Special Representative for Recovery and Governance in the United Natio…

ROME, Italy, June 5, 2014/African Press Organization (APO)/ — FAO is scaling up its emergency response operations in South Sudan despite problems of access and insecurity in parts of the country. The Organization has extended its emergency response for an additional three months to reach conflict-affected farmers, fishers and herders with vital emergency livelihood kits that will enable them to plant crops, fish waterways and protect livestock from fatal diseases.

Since the crisis began, more than 110 000 emergency livelihood kits have been distributed, including crop seeds, fishing kits, vegetable seeds and livestock health kits.

With $42 million of funding received to date, FAO is supporting 1.3 million people. However, more funding is urgently needed to reach out to vulnerable rural communities in the worst-hit areas while building resilience throughout the country and prevent a further worsening of food insecurity.

FAO reaching remote communities by all means possible

As well as targeting conflict-affected communities with large-scale distributions by truck, FAO successfully flew 21 tonnes of crop seeds to Pibor in Jonglei state in partnership with the United Nations Missions in Sudan (UNMISS) .

Subsequently, FAO undertook an emergency airdrop with the support of the World Food Programme (WFP) logistics capacity, dropping packages from a plane to a partner on the ground who then distributed the seed to farmers. Although used only as a last resort due to their high cost, airdrops guarantee that farmers in the most inaccessible areas receive support, enabling them to grow their own food and making the operation cost-efficient in the long run.

Three tonnes of crop seeds were successfully air-dropped in Mayendit county, Unity State, and will enable 250 households to produce over 200 tonnes of crops including maize, sorghum, cowpea and sesame.

“FAO is doing everything it can to assist the highly vulnerable people of South Sudan, including innovations in the delivery of seeds through airdrops,” said Sue Lautze, FAO’s Head of Office in South Sudan and the UN’s Deputy Humanitarian Coordinator in the country. “Portability and flexibility are our watchwords right now. FAO is grateful to WFP and the donors who facilitated these initial airdrops. We will continue to integrate this logistic option as part of the FAO-WFP-UNICEF rapid response partnership.”

The complex logistical operation has been possible thanks to collaboration with humanitarian partners such as WFP, the Logistics Cluster, UNMISS and the Government of the Republic of South Sudan.

Access constraints hamper humanitarian assistance

“The humanitarian response has been facing serious logistical challenges in reaching affected communities,” Lautze said. “Humanitarian access and insecurity remain the biggest threats to food security in the country – if we cannot reach those in most need there is a real risk of famine later in 2014 and into 2015.”

FAO’s emergency response programme is actively addressing the rapidly deteriorating food security situation highlighted by a new Integrated Food Security Phase Classification (IPC) report.

Due to the impacts of conflict and displacement, more than 3.5 million people are currently suffering from crisis or emergency levels of food insecurity, meaning they are unable to meet basic survival needs even with extreme coping mechanisms such as selling livestock and other productive assets. Unless these communities benefit from humanitarian assistance, their food security will deteriorate even further.

Twin-track approach to counteract food insecurity

“FAO’s work is not limited to humanitarian operations – we have a twin-track approach where we will continue with our development projects whilst responding to the most critical humanitarian needs,” Lautze explained.

“That said, our focus in coming months will be on the most food insecure counties in Jonglei, Unity and Upper Nile states where there is a real risk of famine in localized areas later this year unless we can get farmers planting now. This deterioration coincides with the area’s lean season, when food insecurity is already at its peak.”

FAO is appealing for $108 million as part of the UN’s revised Crisis Response Plan and has received $42 million to date. Additional funding could bring the total number of people supported in 2014 to 2.7 million.