afrol News, 18 February - Lesotho's finance minister, Timothy Thahane presented the annual budget estimates today in Maseru, calling for sound spending in response to the global crisis effects on the Mountain Kingdom.

Presenting the 2009/10 estimates in parliament today, Dr Thahane said amongst significant budget cuts, government departments have been instructed to keep their travel and transport expenses at the previous year's level.

"To achieve our overarching objective of pursuing high broad-based and sustainable growth, Recurrent Budget will have to be kept relatively constant in real terms. Indeed, government has decided that all ministries must keep their travel and transport, including subsistence and fares at last year's levels. Workshops and local trainings at hotels must be eliminated or drastically curtailed and old programmes be reviewed with a view to eliminating some to make room for new ones," announced the finance minister to a loud of parliament clapping approval.

He also tongue-lashed on implementing government ministries on their failure to fully utilise the development budget, saying in the past few years only 70 percent of capital expenditure was used. "It is important that this situation be corrected without delay. Only when funds are spent on time can the country and the intended beneficiaries reap the fruit of these investments. The government plans to tighten project preparation, appraisal and approval procedures to ensure that only projects that are ready for implementation on April 1st get into the Appropriation Budget," he said.

Dr Thahane said of the proposed total expenditure of M11, 651 million, of which M8, 237 million is recurrent expenditure while M3, 414 million is Capital expenditure, these expenditures will be financed through government revenue of M8, 883 million; grants of M1,078 million and M383 million from external soft loans from Multilateral Development Institutions.

He said this would result in a deficit of M1, 307 million or 8 percent of GDP. "While this deficit appears large compared to the Budget surpluses of the past, it is critical in the current economic environment for preserving our jobs, productive capacity and for laying foundations for future competitiveness and a conducive investment climate. It is also necessary to protect our vulnerable groups," he explained, adding that the deficit is expected to come down in the next three years to the usual guideline of 3 percent because of some once off items that will not recur in future budgets.

Motivating the adoption of the budget estimates by parliament, Dr Thahane said the drawing of the 2009/10 estimates was made under tough and challenging times for Lesotho, citing amongst others, fallen demands of the clothing and textiles exports and therefore threatened jobs, as well as the declining prices for diamonds which Lesotho has been recently making headlines on.

"The expected decline in demand for capital and consumer imports into the SACU region, coupled with global reductions in tariffs will mean sharp decreases in the SACU Revenue Pool and the share of Lesotho in it. Given the lag with which Revenue Adjustments are made, Lesotho may have to pay back to the pool between M600 and 900 Million in the coming years. This is a challenge for us to redouble our efforts to raise Non-SACU Revenues," said Dr Thahane, while also reminding that Lesotho's development partners have also been hit hard by the crisis and are likely to have to scale down their support to Lesotho and all other developing countries.

"Though we face the rough waves of the global "financial Tsunami", it is important that, as a Nation, we should keep our focus on the medium and long term," said the finance minister urging for collective approach to meeting all the challenges of preserving jobs, protecting the most vulnerable members of the society and increasing competitiveness for the calmer economic times to come.

By staff writer

© afrol News

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