LESOTHO debt portfolio magnitude has increased significantly, ending at M19 320 billion as at March 2020.
business
Nov. 5, 2021
NEO SENOKO
3 min read
Lesotho debt portfolio worsens
Acting Auditor General, Monica Besetsa
Story highlights
Interest paid on domestic debt amounted to M265 million
Increase represents 22% higher than previous figure of M15 870billion
This is according to the report of the Auditor General on the consolidated financial statements for the year ended March 31, 2020.
The increase represents 22 percent higher than the previous figure of M15 870 billion. The significant increase is on long-term debt.
“There was an expansion on external debt and the contributing factors are new borrowings of M4 702 billion as well as the negative impact on exchange rate applied on closing balances.
“The opening debt stock was M12 661 billion and closing balance was M15 632 billion as at March 31, 2020,” the Acting Auditor General Monica Besetsa revealed in her report.
The Auditor General report presents the results of audit of the consolidated financial statements for the year ended March 31, 2020 and various other audits undertaken in ministries, departments, agencies and statutory bodies subject to audit.
The consolidated financial statements for the year under review further shows the opening balance of M3 209 billion for domestic debt and new issues of treasury bills, treasury bonds and fiscal bills amounting to M2 508 billion while principal repayments were M2 029 resulting into a closing balance of M3 688 billion. Interest paid on domestic debt amounted to M265 million.
Under domestic debts for instance, treasury bills were recorded at a closing balance of M875 675 during the year under review, while treasury bonds closed at M2 382 619 and fiscal bills at M430 000.
The public debt liability is a major Government liability and a key sustainability issue for the Government. It requires comprehensive, accurate and timely records for good management.
The public debt statement shows the particulars of outstanding external and domestic loans. The external loans are raised from bilateral, multilateral and commercial sources while domestic loans are raised by the sale of development sticks, treasury bonds and through banking institutions.
The Minister of Finance is empowered by the Loans and Guarantees Act, 1967 to raise loans internally and externally for financing development projects.
Enjoy our daily newsletter from today
Access exclusive newsletters, along with previews of new media releases.
Section 116 of the Constitution stipulates that all debt charges for which Lesotho is liable should be a charge on the consolidated fund.
According to the Constitution, debt charges include interest, sinking fund charges, the repayment or amortisation of debt and all expenditure in connection with the raising of loans on the security of the consolidated fund and the service and redemption of debt created thereby.
In its 2020 edition of the International Debt Statistics report, the World Bank showed that due to the COVID-19 pandemic, the external debt stock of low and middle income countries rose, on an average of 5.3 percent in 2020, about the same pace as the two prior years.
Prior to the onset of the pandemic, rising public debt levels and heightened debt vulnerabilities were already a cause for concern in many of the world’s poorest countries, and these have been further exacerbated.
And the rise in external indebtedness, the World Bank says was not matched by gross national income (GNI) and exports growth.
Tailored for you
