M10 billion SACU relief for the cash-strapped govt
The government is expecting M10 billion from the Southern African Customs Union (SACU) common revenue pool for the 2023/24 financial year; a timely boost to ease its on-going revenue woes.
In January 2023, the government’s total debt had ballooned by three billion compared to the previous financial year due to revenue challenges.
The government contracted new debt amounting to M873. 6 million from the domestic money and capital markets during the 2022/23 financial year, in order to honour its financial obligations.
It also borrowed M914.3 million from external sources exclusively for capital expenditure during the current financial year.
A further M2 billion (13. 2 percent of total debt) increase is attributable to exchange rate losses. Lesotho’s total debt had shot up to M22 billion in January this year.
But according to the Finance and Development Minister, Dr Retšelisitsoe Matlanyane, Lesotho will receive M10.1 billion from its SACU revenue share for the coming fiscal year.
The expected revenue is up from M5. 39 billion that was projected for the 2022/23 financial year, reflecting a whopping 88 percent increase.
Dr Matlanyane highlighted these in her budget speech for the 2023/24 financial year before the joint sitting of parliament earlier this week.
The minister said the higher than anticipated SACU receipts would influence the M1 billion fiscal surplus expected from the 2023/24 budget execution.
The proposed 2023/24 budget is described as laying the foundation for reconstruction, and recovery of our economy while consolidating growth and building resilience.
“The overall revenue target is estimated at M25.1 billion, of which, SACU revenue is M10,1 billion, tax revenue; M10.9 billion, non-tax revenue of M2.8 billion and grants at M1.2 billion,” she said.
“The proposed revenue and expenditure allocations for 2023/24 are projected to result in a fiscal surplus of approximately M1.0 billion or 2.5 percent of GDP. The fiscal surplus is due to the higher SACU receipts expected in 2023/24 by 25.4 percent of GDP.”
To reduce over reliance on SACU revenue, the government plans to establish a development fund to accumulate revenue.
“In pursuit of macro-fiscal stability, the government shall work hard over the medium term to reduce Lesotho’s dependence on volatile SACU receipts by working towards a state where recurrent expenditures can be covered by tax and non-tax revenues.
“The development component of SACU revenue and donor funding will be used to finance infrastructure and capital spending, as well as to create a development and stabilization fund. This fund shall also be complemented by a part of earnings from natural resources.”