Lesotho’s growth outlook has dipped from 2.6 percent in the last financial year (FY24/25), to a GDP of about 1.4 percent in the current FY25/26.
This emerged from the most recent Article IV consultation, by the International Monetary Fund (IMF) in Lesotho.
The IMF said this reflects a much more turbulent and uncertain external environment and that the peg to the Rand has continued to serve Lesotho well, helping bring inflation down from a peak of 8.2 percent in early 2024 to 4.0 percent in April 2025.
Growth in the previous year, was attributed to prudent Government spending, along with buoyant South African Customs Union (SACU) transfers and sizable water royalties.
Julie Ziegler, Spokesperson of the IMF, said “the main challenge for the authorities is to transform these fiscal surpluses into sustainable and high-quality growth – now even more urgent in light of recent shocks. Public funds should be saved wisely and spent strategically, with an emphasis on high-return investment projects. More effective use of public funds, alongside structural reforms, should support longer-term private sector-led growth.”
Picture: Wits University