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Lesotho: Selected Issues and Statistical Appendix

Author(s):
International Monetary Fund
Published Date:
February 2004
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IV. The New SACU Agreement and Its Effect on Revenues34

84. The new 2002 Southern African Customs Union (SACU) agreement is expected to be implemented over the next few years. The new agreement is more democratic than previous SACU agreements and is, therefore, likely to improve the foundation for regional cooperation and integration. The democratic gains do, however, come at a cost to Lesotho and other BLNS (Botswana, Lesotho, Namibia, and Swaziland) countries. The BLNS countries may lose significant fiscal revenue as a consequence of the new 2002 agreement, in combination with new tariff-reducing trade agreements.

A. The Institutional Framework

85. The SACU was launched in 1910, and it is the oldest existing customs union in the world. Current members are Botswana, Lesotho, Namibia, and Swaziland—the so-called BLNS countries—and South Africa.

86. Three agreements have been crucial for the development of SACU: (i) the initial 1910 Customs Union Arrangement, (ii) the 1969 agreement, and (iii) the 2002 agreement, which was signed in the fall of 2002 and is now pending ratification by the parliament of each member country. The agreement is expected to come into use in fiscal year 2005/06 (April-March).

87. According to the arrangement initially agreed in 1910, all member states applied the same rate of import duty, set by South Africa. The common customs revenue pool was administered by South Africa and distributed among members on the basis of fixed (i.e., not trade-related) percentage shares, which left South Africa with 98.7 percent of the revenue.

88. The attainment of independence of the three previous High Commission Territories-Bechuanaland, Basotholand, and Swaziland - necessitated the negotiation of the new 1969 agreement. South Africa was allowed to maintain most of the management of the customs union. For example, the South African tariff remained the common external tariff of SACU and the same arrangement applied to excise duties. The 1969 agreement does, however, contain special provisions with respect to infant industry protection to benefit the industrial growth of the smaller SACU members.

89. The 1969 agreement distributed the customs union revenue through a formula that calculates revenue shares for each BLNS country, with South Africa’s share as a residual. The formula is designed to allocate customs and excise duties to each BLNS country according to its share of total extra- and intra-SACU imports and excisable goods consumed within the customs union. The formula also contains an extra compensation that enhances each BLNS country’s revenue receipts by 42 percent. Revenues are distributed with a lag of two years. That is, revenue distributions in fiscal year 2003/04 are based on customs and excise duties collected in fiscal year 2001/02, as well as trade data for that fiscal year.

90. An important addition was made in 1977, when a so-called stabilized revenue rate was introduced, promising minimum receipts equal to 17 percent of the total value of SACU imports and excisable value to the BLNS countries as a group. The guarantee is binding, and, as a result, SACU revenue receipts are higher than they would have been otherwise. This is important, as SACU revenue is a significant fiscal resource for the BLNS countries. In the case of Lesotho, SACU revenue accounted for about half of total fiscal revenue and grants in the early 1990s, and the share is currently 39 percent.

B. The 2002 Agreement

91. The 2002 SACU Agreement introduces a structure with six new institutions: a Council of Ministers, Customs Union Commission, Secretariat, Tariff Board, Technical Liaison Committees, and a Tribunal:

  • The Council of Ministers is the highest decision-making authority. It is responsible for the overall policy direction and functioning of SACU institutions and the appointment of the Executive Secretary and the members of the Tariff Board.
  • The Customs Union Commission is responsible for implementing the agreement, overseeing the management of the common revenue pool, and supervising the work of the Secretariat. The commission consists of senior officials from each member state.
  • The Secretariat is responsible for the day-to-day administration of the agreement and keeps record of all transactions into and out of the common revenue pool. The Secretariat will be based in Namibia, where the headquarters of SACU will be established. So far, South Africa has been the sole custodian of the common revenue pool, in accordance with the 1969 agreement.
  • The Tariff Board is responsible for recommending tariff changes to the Council of Ministers. The Tariff Board is an independent institution, consisting of experts drawn from member states.
  • Four Technical Liaison Committees advise and assist the commission in its work on matters related to agriculture, customs, trade and industry, and transport. The Council of Ministers has the authority to determine the precise formation of each committee.
  • The Tribunal passes a judgment on any issue concerning the application or interpretation of the agreement, at the request of the Council of Ministers. The determination of the Tribunal is final and binding. The parties to a dispute choose the members of the Tribunal from among a pool of names approved by the Council of Ministers.

92. The 2002 agreement includes a new formula for sharing custom and excise duties. The new revenue-sharing formula consists of three parts:

  • The customs component. Total customs duties collected in all member countries will be distributed to each country in proportion to its share of intra-SACU imports, that is, the share of imports by SACU countries from other members of the customs union.
  • The excise component Of total excise duties collected in all member countries, 85 percent will be distributed to each country in proportion to its share of SACU GDP. In 1998/99, the shares were as follows: South Africa, 92.6 percent; Botswana, 3.4 percent; Lesotho, 0.6 percent; Namibia, 2.4 percent; and Swaziland, 0.9 percent.
  • The development component. Of total excise duties collected in all member countries, 15 percent will be set aside for redistribution of revenue. In the first step of the calculation, each member country will be allocated 20 percent of the development component. In the next step, each share will be adjusted for differences in per capita GDP, in order to make an additional redistribution from high to low-income members. The net effect of the second-step redistribution is, however, tiny. The difference in per capita GDP between South Africa and Lesotho is large, as Lesotho’s per capita GDP is less than 15 percent of South Africa’s. Despite this major inequality, Lesotho’s share of the component will be raised from 20 percent to 22 percent only, while South Africa’s share will be reduced from 20 percent to 19 percent.

93. Each year, approximately in October or November, the SACU governments and the SACU Secretariat will hold a joint meeting deciding (i) the size of the total revenue pool that will be allocated over the following fiscal year - starting on April 1 - and (ii) the share of each member country:

  • The size of the revenue pool will be based on projections. All later deviations of total revenue collections from the projected size of the pool will be adjusted during the second fiscal year after the actual allocations. For example, if actual revenue collected were to exceed the projections for 2005/06, then the extra collections would be distributed in 2007/08.
  • The actual proportion received by each member country will be based on the three components described above and macroeconomic data on intra-SACU imports, national GDP, and per capita GDP in the five member countries. In order to reduce the risk of preliminary and inaccurate numbers’ muddling the distribution, data will be lagged about three years. For example, the proportion allocated in 2005/06 will probably be based on macroeconomic data for 2002/03. The proportion is fixed once it has been determined, that is, a country that has been allocated a proportion of x percent would not get an upward adjustment, even if later revisions of intra-SACU imports, GDP, and per capita GDP were to indicate that the country had received a proportion that was too small.

94. The new 2002 agreement is more democratic than the previous 1969 agreement. All member countries will now take part in the management of the customs union and have a voice in the discussion of new customs tariffs, whereas this was previously an issue for South Africa’s Board on Tariffs and Trade. The decisions of all SACU institutions except the Tribunal will be made by consensus. This should improve the foundation for regional cooperation and integration. However, the actual trade regime remains basically unchanged.

C. New Trade Agreements

95. The SACU countries are beginning a long process of multiple trade negotiations that will determine the future extent and volume of trade between SACU and its trading partners:

  • The European Union (EU) and South Africa signed the so-called Trade and Development Cooperation Agreement (TDCA) in 1999. One consequence is the creation of a free trade area that will reduce duties on industrial and agricultural products traded between the EU and South Africa over the next ten years. Although the BLNS countries have not signed the agreement, the 1969 SACU Agreement requires that they concur with the terms of the TDCA.
  • SACU has commenced negotiations with the United States toward an extensive free trade agreement, which is scheduled to be concluded before the end of 2005.
  • Discussions with MERCOSUR (the Common Market of the South) are also under way, and South Africa has expressed a willingness to lead SACU into bilateral trade agreements with Nigeria, China, and India.

96. New free trade agreements will have significant fiscal effects for the SACU member countries. Average import tariffs will gradually decline, and this is estimated to reduce the size of the customs pool significantly over the medium term.

D. Projections of Revenue

97. We have compared previous revenue allocations with the new formula, that is, we have simulated what each member country would have received if the formula had been implemented earlier. There is, however, a significant margin of uncertainty because of the lack and weak quality of trade data. The new formula allocates the customs pool in proportion to the member countries’ share of intra-SACU imports. To simulate the hypothetical distribution of the historical customs pool, ideally we would need five time series with historical data on intra-SACU imports in each member country. Unfortunately, these series do not exist. Instead, we used the 1998/99 shares of intra-SACU imports as reported in Kirk and Stern (2003), who derived their estimates from Customs Union Commission reports. The shares of intra-SACU imports are assumed to be as follows: South Africa, 20 percent; Botswana, 27 percent; Lesotho, 13 percent; Namibia, 25 percent; and Swaziland, 15 percent. However, there are no official and agreed numbers on intra-SACU imports and analysts used different assumptions for the calculations made in preparation of the 2002 arrangement. For example, some calculations assumed that Lesotho’s share of intra-SACU imports was less than 10 percent in 1998/99.

98. The simulations indicate that the BLNS countries would have gained financially, if the new formula had been implemented earlier (Figure IV.1). About R 10,000 million would have been reallocated from South Africa to the BLNS countries over the 11 years from 1993/94 to 2003/04. This would have raised fiscal revenue in the BLNS countries by about 1 ½ percent of GDP a year.

Figure IV.1.SACU: Actual and Simulated Revenues, 1993-2008

Source: Fund staff estimates and projections.

1/ BLNS countries = Botswana, Lesotho, Namibia, and Swaziland.

99. However, the simulations give an overly favorable projection of future SACU revenues in the BLNS countries. New tariff-reducing trade agreements are expected to shrink the size of the customs pool, which generates about 80 percent of the SACU revenues received by the BLNS countries at current tariff rates. The BLNS countries would have been insured against this negative fiscal effect if they had preserved the old 1969 agreement. The stabilized revenue rate promised the BLNS countries as a group minimum receipts equal to 17 percent of the tax base; that is, the total value of SACU imports and excisable value. This promise has now come to an end, together with the old 1969 agreement.

100. In order to illustrate the potential effects of new tariff-reducing agreements, we have made an ad hoc simulation and assumed that tariff cuts would reduce the size of the customs pool by 40 percent, starting in 2005/06.35 As a result, South Africa would lose revenue of about 0.1 percent of GDP each year, while the BLNS countries as a group would lose revenue of about 3 percent of their GDP each year. We have also broken down the simulations for each BLNS country (Figure IV.2). If the customs pool is cut by 40 percent, Lesotho would lose fiscal revenue equal to almost 6 percent of GDP each year, while Swaziland would lose about 4½ percent of GDP. Botswana and Namibia would both lose revenue of about 2¾ percent of their GDP each year. It is obvious that South Africa is fiscally better protected than other SACU members. At current tariff rates, the customs component generates only about 20 percent of South Africa’s total SACU revenues.

Figure IV.2.BLNS Countries: Actual and Simulated SACU Revenues, 1993-2008 1/

Source: Fund staff estimates.

1/ BLNS countries = Botswana, Lesotho, Namibia, and Swaziland.

101. To support the financially weaker countries, all SACU members could agree to reallocate revenues in the event of new tariff-reducing trade agreements. A clear-cut solution would be to reallocate excise duties from the excise component to the development component. Such reallocations are envisaged in the 2002 agreement. However, South Africa is the only expected net contributor to the development component, and all member countries must give their consent before any reallocation. It is unclear how amenable South Africa would be to requests to raise the share of the development component.

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STATISTICAL APPENDIX
Table 1.Lesotho: Gross Domestic Product by Sector (At constant 1995 prices), 1996/97-2002/03 1/2/(In millions of maloti)
1996/971997/981998/991999/002000/012001/022002/03
Primary sector618.1625.2646.9672.3687.4683.1661.3
Crops414.8399.9383.9392.5434.6439.7398.0
Livestock169.9189.9229.1249.1224.5219.1240.3
Agricultural services33.435.434.030.728.424.223.1
Secondary sector1,312.71,421.81,294.61,321.21,389.31,458.81,548.2
Mining and quarrying3.13.32.62.83.33.43.7
Manufacturing and handicraft541.5555.9541.5546.0574.9618.6659.1
Electricity and water130.9225.1182.8224.5222.5231.8237.7
Construction280.6264.2296.9361.7443.8457.4558.0
LHWP construction 3/356.6373.3270.8186.1144.9147.589.7
Tertiary sector1,366.01,434.61,449.01,449.21,450.01,481.91,533.2
Wholesale and retail304.2319.7305.6290.9283.4291.8304.9
Hotel and restaurants47.447.845.151.054.454.056.1
Transport and storage75.576.771.870.571.173.677.1
Post and telecommunications50.559.261.069.075.380.380.5
Financial intermediation113.2103.1111.2152.5203.7214.5230.0
Owner-occupied dwellings156.6159.8163.0166.2169.6173.0176.6
Other real estate and business services64.477.467.760.958.156.760.9
Public administration247.5261.6282.0276.7271.8268.3270.7
Education285.7300.8308.8314.2320.7333.8349.2
Health and social work62.462.572.071.164.665.567.6
Community, social, and personal services40.641.141.742.342.843.444.0
Less: financial services indirectly measured-82.0-75.1-80.6-116.0-165.5-172.8-184.5
GDP at producer prices3,296.83,481.63,390.53,442.73,526.63,623.83,742.7
Plus: taxes on products499.7495.6448.9417.8405.5436.6472.7
GDP at purchasers’ prices3,796.43,977.13,839.53,860.43,932.14,060.44,215.5
Plus: net factor income from abroad1,269.21,266.31,065.41,031.3991.6911.4945.6
Gross national income at purchasers’ prices5,065.75,243.54,904.84,891.74,923.74,971.75,161.1
Sources: Lesotho Bureau of Statistics; Central Bank of Lesotho; Lesotho Highlands Development Authority; and staff estimates.

Fiscal year begins April 1.

Fiscal year estimates based on sectoral calendar-year data compiled by the Bureau of Statistics.

Lesotho Highlands Water Project (LHWP).

Sources: Lesotho Bureau of Statistics; Central Bank of Lesotho; Lesotho Highlands Development Authority; and staff estimates.

Fiscal year begins April 1.

Fiscal year estimates based on sectoral calendar-year data compiled by the Bureau of Statistics.

Lesotho Highlands Water Project (LHWP).

Table 2.Lesotho: Gross Domestic Product by Sector (At current prices), 1996/97-2001/02 1/2/(In millions of maloti)
1996/971997/981998/991999/002000/012001/02
Primary sector667.4711.5808.7905.51,024.01,110.3
Crops454.7454.3495.3544.9660.6735.9
Livestock174.2210.4263.0310.5315.3330.7
Agricultural services38.546.850.450.248.243.7
Secondary sector1,497.31,766.31,807.42,111.92,285.52,596.7
Mining and quarrying3.13.74.15.58.09.3
Manufacturing and handicraft609.7706.9787.5844.8945.71,129.1
Electricity and water171.2291.6249.6321.2329.8361.5
Construction294.8292.2385.0647.4749.9824.0
LHWP construction 3/418.5471.8381.3293.1252.3272.8
Tertiary sector1,547.41,777.91,960.62,114.12,253.32,485.8
Wholesale and retail342.8397.7412.4441.6504.0568.0
Hotel and restaurants53.058.159.571.981.388.5
Transport and storage96.4107.8105.3107.9115.6137.7
Post and telecommunications48.655.361.577.384.995.9
Financial intermediation127.3127.3141.5194.5260.6274.7
Owner-occupied dwellings170.1177.8187.2191.0208.3253.2
Other real estate and business services72.594.387.386.295.797.7
Public administration284.8346.6418.7452.2463.1485.0
Education329.8377.4435.9474.0489.0530.8
Health and social work69.979.8102.4110.4103.8111.0
Community, social, and personal services44.950.054.659.163.770.0
Less: financial services indirectly measured-92.7-94.3-105.5-151.9-216.7-226.6
GDP at producer prices3,712.04,255.74,576.75,131.65,562.86,192.8
Plus: taxes on products508.2514.3505.1537.1574.3646.4
GDP at purchasers’ prices4,220.24,770.05,081.85,668.76,137.26,839.1
Plus: net factor income from abroad1,410.91,541.21,410.11,514.31,547.71,535.1
Gross national income at purchasers’ prices5,631.16,311.26,491.87,183.07,684.88,374.2
Sources: Lesotho Bureau of Statistics; Central Bank of Lesotho; Lesotho Highlands Development Authority; and staff estimates.

Fiscal year begins April 1.

Fiscal year estimates based on sectoral calendar-year data compiled by the Bureau of Statistics.

Lesotho Highlands Water Project (LHWP).

Sources: Lesotho Bureau of Statistics; Central Bank of Lesotho; Lesotho Highlands Development Authority; and staff estimates.

Fiscal year begins April 1.

Fiscal year estimates based on sectoral calendar-year data compiled by the Bureau of Statistics.

Lesotho Highlands Water Project (LHWP).

Table 3.Lesotho: Gross Domestic Product by Expenditure, 1996/97-2002/03 1/2/
1996/971997/981998/991999/002000/012001/022002/03
(In millions of maloti)
Gross domestic product4,220.24,770.05,081.85,668.76,137.26,839.17,731.4
Net factor income from abroad1,410.91,541.21,410.11,514.31,547.71,535.11,734.4
Gross national product5,631.16,311.26,491.87,183.07,684.88,374.29,465.7
Unrequited transfers833.5951.6811.0961.2932.71,164.81,306.3
Gross national disposable income 3/6,464.67,262.77,302.88,144.28,617.59,538.910,772.1
Consumption5,328.16,249.36,159.76,778.17,187.47,347.09,080.4
Government consumption1,112.71,383.81,814.22,135.12,163.42,109.02,637.2
Private consumption4,215.44,865.54,345.54,643.05,024.05,238.06,443.2
Gross national savings 4/1,136.51,013.51,143.01,366.11,430.12,191.91,691.7
Public savings 5/921.9863.2359.4177.7463.2678.8397.5
Private savings 6/214.6150.3783.61,188.4966.91,513.11,294.2
Investment2,412.62,489.22,415.02,660.12,548.93,107.22,983.1
Gross fixed capital formation2,418.52,547.92,471.02,652.52,695.33,269.43,084.6
Government873.7868.3495.7479.9473.0826.7747.5
Private-515.3121.4731.31,257.11,373.81,570.31,738.9
LHWP 7/2,060.11,558.21,244.0915.5669.6872.4598.3
Change in stocks-5.9-58.7-56.07.6-146.4-162.2-101.5
Gross national savings less investment 8/-1,276.1-1,475.8-1,272.0-1,294.0-1,118.9-915.3-1,291.4
(In percent of GDP)
Gross domestic product100.0100.0100.0100.0100.0100.0100.0
Net factor income from abroad33.432.327.726.725.222.422.4
Gross national product133.4132.3127.7126.7125.2122.4122.4
Unrequited transfers19.819.916.017.015.217.016.9
Gross national disposable income 3/153.2152.3143.7143.7140.4139.5139.3
Consumption126.3131.0121.2119.6117.1107.4117.4
Government consumption26.429.035.737.735.330.834.1
Private consumption99.9102.085.581.981.976.683.3
Gross national savings 4/26.921.222.524.123.332.021.9
Public savings 5/21.818.17.13.17.59.95.1
Private savings 6/5.13.115.421.015.822.116.7
Investment57.252.247.546.941.545.438.6
Gross fixed capital formation57.353.448.646.843.947.839.9
Government20.718.29.88.57.712.19.7
Private-12.22.514.422.222.423.022.5
LHWP 7/48.832.724.516.210.912.87.7
Change in stocks-0.1-1.2-1.10.1-2.4-2.4-1.3
Gross national savings less investment 8/-30.2-30.9-25.0-22.8-18.2-13.4-16.7
Sources: Lesotho authorities; and staff estimates.

Fiscal year beginning in April.

Fiscal year estimates based on calendar-year estimates compiled by the Bureau of Statistics.

Gross national product plus unrequited transfers.

Gross national disposable income less consumption.

Government revenues plus grants less government current expenditures (excluding interest payments).

Estimated as a residual.

Lesotho Highlands Water Project (LHWP).

Equivalent to the external current account balance.

Sources: Lesotho authorities; and staff estimates.

Fiscal year beginning in April.

Fiscal year estimates based on calendar-year estimates compiled by the Bureau of Statistics.

Gross national product plus unrequited transfers.

Gross national disposable income less consumption.

Government revenues plus grants less government current expenditures (excluding interest payments).

Estimated as a residual.

Lesotho Highlands Water Project (LHWP).

Equivalent to the external current account balance.

Table 4.Lesotho: Consumer Price Indices, April 1997 - April 2003(April 1997 = 100, unless otherwise indicated)
1997199819992000200120022003
WeightsApr.Apr.Apr.Apr.Apr.JulyOct.Jan.Apr.JulyOct.Jan.Apr.
Consumer price index (CPI) 1/100.0100.0107.3116.9124.3133.0135.4138.7144.0150.6153.4154.1156.6159.8
Food, beverages, and tobacco43.1100.0108.2117.2124.8132.5135.3139.8149.5169.2173.8172.0173.9175.7
Bread and cereals19.3100.0105.1110.6116.8122.3123.6124.5141.6171.1176.8177.1176.3176.9
Meat and meat products4.1100.0109.5115.3120.0132.1135.6135.0141.3146.9150.1154.2160.1162.9
Fruits and vegetables4.0100.0119.7138.5151.5173.8177.0181.5187.3186.2188.5202.2212.4214.7
Alcoholic beverages and tobacco8.1100.0107.5120.6133.7142.3143.3148.4152.1159.3158.8159.6162.0170.2
Food and drinks7.6100.0109.9
Clothing and footwear15.8100.0108.9120.8125.4133.0135.3136.5137.0138.0139.8141.8141.8143.4
Blankets3.3100.0107.3114.4114.3124.8126.1129.9131.7132.5136.7136.7135.2137.4
Other clothing6.3100.0109.3119.9123.9131.5133.3134.9136.2137.3138.0141.8142.9144.5
Footwear6.2100.0109.3124.6132.1138.4141.7141.3140.3141.1142.9144.2144.2145.3
Gross rent, fuel, and power 2/3.9100.0104.5109.7113.4128.4131.0133.1136.7141.1144.5147.9152.2154.6
Gross rent and water charges 2/0.6100.0100.0100.0101.5101.5101.5103.2107.4107.4107.4107.4107.4107.4
Fuel and power3.3100.0105.3110.9115.0131.9134.9137.2141.0146.0149.8153.6158.5161.2
Furniture and household operations18.1100.0108.1120.9128.8138.5140.0141.0142.4144.8146.9149.6153.5155.3
Transport and communications8.4100.0103.3109.6125.3140.0144.8147.0150.4153.9156.5158.3160.4165.3
Other goods and services10.5100.0104.2110.7115.7120.3121.5126.9128.4129.9135.2136.9139.7142.5
Memorandum item:
Annual CPI inflation rates (in percent; end of period)8.87.38.96.37.07.67.69.011.113.213.311.18.7
Source: Lesotho Bureau of Statistics.

Covers all households in six lowland towns, including Maseru.

Since January 1994, rent has been excluded from CPI calculations because of data collection problems.

Source: Lesotho Bureau of Statistics.

Covers all households in six lowland towns, including Maseru.

Since January 1994, rent has been excluded from CPI calculations because of data collection problems.

Table 5.Lesotho: Basic Monthly Minimum Wages, 1996-2003 1/
1996

Nov.
1997

Oct.
1998

Dec.
1999

Oct.
2000

Oct.
2001

Sep.
2002

Oct.
2003

Oct.
(In maloti)
Copy typist419.5457.3508.0554.0593.0631.0694.0732.0
Driver
Car and light van487.1530.9589.0642.0687.0732.0805.0849.0
Medium-sized vehicle533.9581.9646.0704.0753.0802.0882.0931.0
Heavy vehicle683.6745.2827.0901.0964.01,026.01,129.01,191.0
Operator (hammer mill)355.3387.3430.0469.0502.0535.0589.0621.0
Junior clerk419.5457.3508.0554.0593.0631.0694.0732.0
Machine operator487.1530.9589.0642.0687.0732.0805.0849.0
Messenger355.3387.3430.0430.0502.0535.0589.0621.0
Machine attendant419.5457.3508.0554.0593.0631.0694.0732.0
Receptionist419.5457.3508.0554.0593.0631.0694.0732.0
Shop assistant391.7426.9474.0517.0553.0589.0648.0684.0
Telephone operator419.5457.3508.0554.0593.0681.0694.0732.0
Ungraded artisan (heavy physical work)452.6493.4548.0597.0639.0681.0749.0790.0
Unskilled labor
Heavy physical work391.7426.9474.0517.0553.0589.0648.0684.0
Light physical work355.3387.3430.0469.0502.0535.0589.0621.0
Waiter402.8439.1487.0531.0568.0605.0666.0703.0
Watchman495.2539.7599.0653.0699.0714.0818.0863.0
Weaver
Training (six months)355.3387.3430.0469.0502.0535.0589.0621.0
Trained372.6406.2451.0492.0528.0560.0616.0650.0
Sewing machine operator
Training (six months)355.3387.3430.0469.0502.0535.0589.0621.0
Trained372.6406.2451.0492.0526.0560.0616.0650.0
Small business242.0263.8293.0319.0341.0363.0399.0421.0
Domestic servant121.0131.9146.0159.0170.0181.0199.0210.0
(Annual percentage change)
Memorandum items:
General increase 2/11.09.011.19.17.06.410.05.5
Exception: watchman11.09.011.09.07.02.114.65.5
Source: Ministry of Labor.

Based on legal notices issued in July 1995, October 1996, September 1997, December 1998, October 1999, October 2000, September 2001, October 2002, and October 2003.

Rate of increase for all categories unless specified as exception.

Source: Ministry of Labor.

Based on legal notices issued in July 1995, October 1996, September 1997, December 1998, October 1999, October 2000, September 2001, October 2002, and October 2003.

Rate of increase for all categories unless specified as exception.

Table 6.Lesotho: Public Service Employment, 1996/97-2002/03 1/
Grade1996/971997/981998/991999/002000/012001/022002/03
Established civil service 2/
Professional and administrativeG-L1,6491,7482,0042,0302,0082,061
Professional and administrative 3/H-L955
Professional and administrative 3/F-G3,464
ExecutiveE-F3,4073,4533,6393,6674,2034,299
Executive 3/E1,443
ClericalA-D13,44213,54014,82214,99313,34613,37514,481
Total18,49818,74120,46520,69019,55719,73520,343
Actual employment
Civil service 2/17,68518,43618,43618,27116,56714,47317,515
Defense and public order4,9424,9426,3946,2884,6775,5726,669
Teachers9,86810,11610,20910,42510,68611,29211,404
Total32,49533,49435,03934,98431,93031,33735,338
Source: Ministry of Public Service.

Fiscal year is April-March.

The established civil service posts exclude teachers, members of armed forces, and daily-paid workers, but include chiefs, parliamentarians, senators, and statutory workers.

Apply in 2002/03 and onward.

Source: Ministry of Public Service.

Fiscal year is April-March.

The established civil service posts exclude teachers, members of armed forces, and daily-paid workers, but include chiefs, parliamentarians, senators, and statutory workers.

Apply in 2002/03 and onward.

Table 7.Lesotho: Central Government Operations, 1996/97-2002/03 1/
1996/971997/981998/991999/002000/012001/022002/03
(In millions of maloti)
Revenue2,0352,2472,1742,3132,6272,7883,035
Tax revenue1,5541,7951,6951,8891,9422,3782,576
Customs revenue1,0061,1731,0341,1831,1261,4381,470
Noncustoms tax revenue5486226617068169401,106
Income taxes299340387420469580663
Sales tax194224233238280302344
Oil levy46473644625186
Other tax revenues911555713
Nontax revenue481452479424685410459
Water royalties14383120138135176213
Interest received15117822376631524
Other nontax revenues187191136210487219222
Total expenditure and net lending2,0532,3422,4383,3732,8642,9383,659
Current expenditure1,1791,4741,9432,3192,4342,3122,857
Wages and salaries6047218388369259921,082
Interest payments6690129183271203220
Of which: external interest376096102160126110
Goods, services, and transfers5086639771,2991,2381,1171,555
Goods and services2683245041,0299057201,046
Transfers and subsidies240339473270333396509
Capital expenditure and net lending8748684961,055430626802
Domestically funded252247233250183277171
Externally funded621621263230240373512
Grant funded193179120130126167236
Loan funded428442143100115206276
Overall balance before grants-18-95-265-1,061-238-150-624
Grants from abroad203179120130126189296
Overall balance after grants18584-145-931-11239-328
Total financing-185-84145931112-39328
Financing abroad34734618-71-257-5456
Loan drawings428442143100115206276
Amortization-81-97-124-171-372-260-220
Domestic financing-504-4741821,04839016272
Bank-528-5081671,02536767321
Nonbank2433152323-52-49
Residual-2945-55-46-2100
(In percent of GDP, unless otherwise indicated)
Revenue48.247.142.840.842.840.839.3
Customs revenue23.824.620.420.918.321.019.0
Non customs tax revenue13.013.013.012.413.313.714.3
Nontax revenue11.49.59.47.511.26.05.9
Total expenditure and net lending48.649.148.059.546.743.047.3
Current expenditure27.930.938.240.939.733.837.0
Wages and salaries14.315.116.514.715.114.514.0
Other expenditure13.615.821.726.224.619.323.0
Capital expenditure and net lending20.718.29.818.67.09.110.4
Overall balance before grants-0.4-2.0-5.2-18.7-3.9-2.2-8.1
Grants from abroad4.83.72.42.32.02.83.8
Overall balance after grants4.41.8-2.8-16.4-1.80.6-4.2
Financing abroad8.27.20.4-1.3-4.2-0.80.7
Domestic bank financing-12.5-10.63.318.16.01.04.1
Memorandum item;
GDP at market prices (in millions of maloti)4,2204,7705,0825,6696,1376,8397,731
Sources: Ministry of Finance; and staff estimates.

Fiscal year is April-March.

Sources: Ministry of Finance; and staff estimates.

Fiscal year is April-March.

Table 8:Lesotho Government Revenue and Grants, 1996/97-2002/03 1/(In millions of maloti)
1996/971997/981998/991999/002000/012001/022002/03
Taxes on net income and profits299.0340.1387.0419.5468.8579.5663.3
Company tax52.669.765.058.5126.3159.2142.9
Income tax (pay as you earn)204.6221.7278.0306.5314.7371.8404.1
Gaming tax2.93.01.73.82.70.00.0
Withholding tax23.426.728.840.221.10.00.0
Other income and profit taxes15.519.013.510.54.048.5116.3
Taxes on goods and services241.6273.3270.9283.2343.6355.0435.9
Sales tax193.9223.5233.3238.0279.8302.0343.7
Trade licenses1.72.41.71.61.82.15.9
Petrol levy46.047.435.943.662.050.986.3
Customs duties1,006.01,172.71,034.41,183.11,126.11,438.21,470.0
Other taxes7.28.82.43.03.45.36.7
Stamp duty2.02.10.60.91.62.74.1
Other taxes5.26.71.82.11.82.62.6
Total tax revenue1,553.81,794.91,694.71,888.81,941.92,378.02,575.9
Administrative fees, charges, and nonindustrial sales82.0106.967.8142.7162.452.362.3
Attestation fees0.50.80.60.60.40.70.8
Fines and forfeits3.24.33.96.45.16.26.9
Property and other income395.1340.1403.6274.3516.8350.6388.8
Interest on deposits150.7177.7222.976.063.214.624.0
Water royalties142.883.3120.0138.3135.0176.1212.5
Rand monetary compensation64.734.643.042.066.00.043.9
Dividends15.614.69.12.4174.836.446.2
Other property income21.329.98.615.677.8123.562.2
Total nontax revenue480.8452.1478.9424.0684.7409.8458.8
Total revenue2,034.62,247.02,173.62,312.82,626.62,787.83,034.7
Grants203.4178.7120.0130.0125.6188.8296.3
Total revenue and grants2,238.02,425.72,293.62,442.82,752.22,976.63,331.0
Sources: Ministry of Finance; and staff estimates.

Fiscal year is April-March.

Sources: Ministry of Finance; and staff estimates.

Fiscal year is April-March.

Table 9.Lesotho: Southern African Customs Union (SACU) Operations, 1996/97-2002/03
Revenue Year 1/

Data Year 2/
1996/97

1994/95
1997/98

1995/96
1998/99

1996/97
1999/00

1997/98
2000/01

1998/99
2001/02

1999/00
2002/03

2000/01
(In percent)
Basic rate 3/8.07.56.56.26.37.37.3
Revenue (“compensation”) rate 4/11.410.79.28.79.09.67.8
Stabilization factor 5/4.34.75.45.75.55.26.1
Stabilized rate (calculated) 6/15.715.314.614.414.514.813.9
Stabilized rate (actual) 7/17.017.017.017.017.017.017.0
(In millions of maloti, unless otherwise specified)
Dutiable base 8/4,787.35,561.65,433.06,260.56,021.17,327.87,334.0
Growth rate (in percent)13.316.2-2.315.2-3.821.70.8
First estimate (payment) 9/813.8945.5923.61,064.31,023.61,245.71,246.8
First adjustment (payment) 10/192.2227.3109.8118.8100.0181.4223.2
Final adjustment (payment) 11/0.00.00.10.00.00.00.0
Actual receipts 12/1,006.01,172.71,033.41,183.11,126.21,438.21,470.0
Growth rate (in percent)11.016.6-11.914.5-4.827.72.2
Memorandum item:
First estimate based on basic rate only383.0417.1353.1388.2381.6534.9535.4
Sources: Department of Customs and Excise; and staff estimates.

Fiscal year (April-March) in which indicated revenue payments are received.

Fiscal year of data on which calculations are based (rates and dutiable base).

Customs and excise revenues as percent of dutiable base (imports and excisable production, and duties) for Southern African Customs Union as a whole (data year).

Basic rate multiplied by 1.42, as initial compensation for disadvantages to smaller members.

One-half of difference between 20 percent and revenue (compensation) rate.

Revenue (compensation) rate plus stabilization factor.

At least 17.0 percent and no more than 23.0 percent; the calculated stabilized rate applies if it falls between 17 percent and 23 percent. In recent years, the lower limit of 17.0 percent has been the operative rate applied to the dutiable base.

Lesotho’s imports (c.i.f. and duty paid, adjusted to include electricity, estimated border shopping, etc.), excisable goods produced and consumed, and duties collected in the data year.

Stabilized rate (actual) times dutiable base. Referred to as “accrued receipts” of data year.

Stabilized rate (actual) times increase in dutiable base from two years earlier (as allowance for growth in dutiable base to revenue year).

Minor adjustments made to account for revisions in base data, usually of previous data year, Calculated here as a residual.

As reported in government revenue data.

Sources: Department of Customs and Excise; and staff estimates.

Fiscal year (April-March) in which indicated revenue payments are received.

Fiscal year of data on which calculations are based (rates and dutiable base).

Customs and excise revenues as percent of dutiable base (imports and excisable production, and duties) for Southern African Customs Union as a whole (data year).

Basic rate multiplied by 1.42, as initial compensation for disadvantages to smaller members.

One-half of difference between 20 percent and revenue (compensation) rate.

Revenue (compensation) rate plus stabilization factor.

At least 17.0 percent and no more than 23.0 percent; the calculated stabilized rate applies if it falls between 17 percent and 23 percent. In recent years, the lower limit of 17.0 percent has been the operative rate applied to the dutiable base.

Lesotho’s imports (c.i.f. and duty paid, adjusted to include electricity, estimated border shopping, etc.), excisable goods produced and consumed, and duties collected in the data year.

Stabilized rate (actual) times dutiable base. Referred to as “accrued receipts” of data year.

Stabilized rate (actual) times increase in dutiable base from two years earlier (as allowance for growth in dutiable base to revenue year).

Minor adjustments made to account for revisions in base data, usually of previous data year, Calculated here as a residual.

As reported in government revenue data.

Table 10.Lesotho: Economic Classification of Government Expenditure, 1996/97-2002/03 1/(In millions of maloti)
1996/971997/981998/991999/002000/012001/022002/03
Current expenditure1,179.01,473.81,942.72,318.52,434.22,312.32,856.9
Wages and salaries604.4721.3837.6835.9925.1992.41,082.1
Goods and services268.2323.6504.11,028.8905.0720.31,045.7
Subsidies and transfers240.1338.9472.6270.4333.3396.3509.4
Pensions29.822.953.753.074.989.6105.4
Subventions and transfers210.3316.0418.9217.4258.4306.7404.0
Of which: social safety net6.05.06.03.00.00.00.0
Interest payments66.390.0128.5183.4270.8203.3219.7
External36.659.996.2101.6159.7126.0109.5
Domestic29.730.132.381.8111.177.3110.2
Capital expenditure and net lending873.7868.3495.71,054.9430.0625.6802.2
Acquisition of assets873.7868.3495.7479.9423.0649.5682.6
Transfers and subventions0.00.00.00.050.096.1151.3
Net lending0.00.00.0575.0-43.0-120.0-31.7
Total expenditure and net lending2,052.72,342.12,438.43,373.42,864.22,937.93,659.1
Sources: Ministry of Finance; and staff estimates.

Fiscal year is April-March.

Sources: Ministry of Finance; and staff estimates.

Fiscal year is April-March.

Table 11.Lesotho: Functional Classification of Government Expenditure, 1996/97-2002/03 1/(In millions of maloti)
1996/971997/981998/991999/002000/012001/022002/03
Current expenditure1,179.01,473.81,942.72,318.52,434.22,312.32,856.9
General public service369.1550.0801.4957.3882.8714.2913.6
Public order, safety, and defense203.0303.7390.9469.1395.4464.9513.1
Of which: defense109.8143.4159.8160.6195.2177.3174.8
Other services166.1246.3410.5488.2487.4249.3400.5
Health, social security, and welfare131.3151.2210.3200.4273.4312.1310.2
Education and community services370.9453.6532.2585.8544.6633.9841.9
Economic services214.1260.0219.0281.3260.0211.9449.1
Agriculture and rural development107.8129.280.299.0101.1113.2261.4
Commerce, tourism, and industry19.821.229.034.138.031.944.8
Water, energy, and mining15.520.424.040.433.835.538.2
Roads55.874.569.166.251.148.548.9
Other transport and communication15.814.716.141.635.442.856.4
Unallocable and other purposes 2/93.059.0179.8293.7413.4380.2281.5
Capital expenditure and net lending873.7868.3495.81,054.9430.0625.6802.2
General public service119.1123.434.7666.62.0182.3162.3
Public order, safety, and defense17.223.23.720.72.00.00.0
Of which: defense0.00.00.013.92.00.00.0
Other services101.9100.231.0645.90.0182.3162.3
Health, social security, and welfare73.139.217.243.513.096.837.5
Education and community services101.770.6120.4108.529.7117.2210.5
Economic services577.2635.1323.5236.347.8383.0372.4
Agriculture and rural development115.6104.345.252.77.141.841.5
Commerce, tourism, and industry0.98.120.417.21.571.757.4
Water, energy, and mining266.2202.597.799.21.1101.489.8
Roads116.7291.2158.650.736.1168.1181.4
Other transport and communication77.829.01.616.52.00.02.3
Unallocable and other purposes 2/2.60.00.00.0337.6-153.719.5
Total expenditure and net lending2,052.72,342.12,438.53,373.42,864.22,937.93,659.1
General public service488.2673.4836.11,623.9884.8896.51,075.9
Public order, safety, and defense220.2326.9394.6489.8397.4464.9513.1
Of which: defense109.8143.4159.8174.5197.2177.3174.8
Other services268.0346.5441.51,134.1487.4431.6562.8
Health, social security, and welfare204.4190.4227.5243.9286.4408.9407.7
Education and community services472.6524.2652.6694.3574.3775.11,052.4
Economic services791.9895.1542.5517.6307.8654.9822.1
Agriculture and rural development223.4233.5125.4151.7108.2155.0302.9
Commerce, tourism, and industry20.729.349.451.339.5103.6102.2
Water, energy, and mining281.7222.9121.7139.634.9136.9128.0
Roads172.5365.7228.3116.987.8216.6230.3
Other transport and communication93.643.717.758.137.442.858.7
Unallocable and other purposes 2/95.659.0179.8293.7811.0226.5301.0
Sources: Ministry of Finance; and staff estimates.

Fiscal year is April-March.

Calculated as a residual.

Sources: Ministry of Finance; and staff estimates.

Fiscal year is April-March.

Calculated as a residual.

Table 12.Lesotho: Outstanding Government Domestic Debt by Instrument and Holder, 1996-2003(In millions of maloti)
19961997199819992000200120022003
March 31
Commercial banks
Gross lending 1/65.863.558.836.0584.1687.0815.3967.1
Long term6.24.13.63.9287.7287.7287.7287.7
Bonds0.00.00.00.0287.7287.7287.7287.7
Loans6.24.13.63.90.00.00.00.0
Short term59.659.455.232.1296.4399.3527.6679.4
Loans0.10.00.00.00.00.00.00.0
Treasury bills59.559.455.232.1296.4399.3527.6679.4
Government deposits (-)-37.5-50.9-48.6-66.4-74.4-63.3-63.9-60.7
Net total28.312.610.2-30.4509.7623.7751.4906.4
Central bank
Gross lending 1/233.3152.061.471.1150.4312.7193.6196.1
Long term0.50.00.00.00.00.00.00.0
Bonds0.00.00.00.00.00.00.00.0
Loans0.50.00.00.00.00.00.00.0
Short term232.8152.061.471.1150.4312.7193.6196.1
Loans184.2124.863.464.7142.9246.6191.3196.1
Treasury bills48.627.2-2.06.47.566.02.30.1
Government deposits (-)-1,441.7-1,873.5-2,231.6-2,086.2-1,694.9-1,502.4-1,257.3-1,162.1
Net total-1,208.4-1,721.5-2,170.2-2,015.1-1,544.5-1,189.7-1,063.7-966.0
Nonbank 2/
Long term0.00.00.00.00.00.00.00.0
Bonds0.00.00.00.00.00.00.00.0
Other0.00.00.00.00.00.00.00.0
Short term43.367.5100.9115.5138.2128.6113.7118.6
Treasury bills46.067.5100.9115.5138.2128.6113.7118.6
Compulsory savings-2.70.00.00.00.00.00.00.0
Promissory notes0.00.00.00.00.00.00.00.0
Total nonbank43.367.5100.9115.5138.2128.6113.7118.6
Total domestic debt, net-1,136.8-1,641.4-2,059.1-1,930.0-896.6-437.4-198.659.0
Gross debt outstanding342.4283.0221.1222.6872.71,128.31,122.61,281.8
Government deposits (-)-1,479.2-1,924.4-2,280.2-2,152.6-1,769.3-1,565.7-1,321.2-1,222.8
Source: Central Bank of Lesotho.

Data differ slightly in coverage from banking statistics and may not fully reflect revisions made there.

The nonbank sector includes insurance, bank pension schemes, public servants’ promissory notes and compulsory savings, and public enterprises, as well as the general public.

Source: Central Bank of Lesotho.

Data differ slightly in coverage from banking statistics and may not fully reflect revisions made there.

The nonbank sector includes insurance, bank pension schemes, public servants’ promissory notes and compulsory savings, and public enterprises, as well as the general public.

Table 13.Lesotho: Monetary Survey, March 1997- September 2003
1997199819992000200120022003
MarchMarchJuneSep.Dec.MarchJuneSep.
(In millions of maloti; stocks at end of period)
Foreign assets (net)2,3933,1703,7543,5833,6705,2294,7554,6053,8843,7223,6363,431
Central bank2,1642,9163,3313,0043,0754,4753,9403,8573,2012,9503,0602,680
Commercial banks 1/229254423579595754815748683773575750
Domestic credit-440-329238-1,600-1,848-3,096-2,533-2,418-1,716-1,531-1,381-1,219
Claims on government (net)-1,631-2,044-1,953-939-579-511-482-342-322-190-86-197
Central bank-1,641-2,054-1,927-1,490-1,067-1,297-1,241-1,098-1,066-792-966-971
Commercial banks1010-26551487786759756744602880774
Claims on the rest of the economy 2/8781,1151,0729431,0039439561,0071,013512540564
Other items (net) 2/-314-600-1,120-1,604-2,272-3,528-3,007-3,083-2,408-1,852-1,836-1,585
Money and quasi money1,3261,6401,7531,7371,8222,1332,2222,1872,1682,1912,2542,212
Narrow money6328319889761,1451,4131,4711,4501,4411,4441,3961,423
Maloti with public8691126147143164168181180179176188
Demand and call deposits5397308538298021,0321,0891,0801,0991,1031,0601,064
Quasi money694809765733678720751737727747859789
Time and savings deposits694809765733678720751737727747859789
Memorandum items:(Annual percentage change)
Broad money17.223.76.9-1.04.917.018.315.78.82.71.51.1
Net foreign assets27.732.518.4-4.62.442.527.911.0-26.9-28.8-23.5-25.5
Total domestic credit-1,124.7-25.3-172.5-771.115.567.637.77.1-48.3-50.5-45.5-49.6
Credit to government (net)49.125.3-4.5-51.9-38.3-11.8-34.2-55.4-48.8-62.8-82.2-42.4
Credit to the economy 2/17.827.1-3.9-12.06.4-6.0-1.44.02.6-45.8-43.5-44.0
(Changes as a percentage of opening period broad money)
Net foreign assets45.958.635.6-9.85.085.5-22.2-6.7-33.0-7.5-4.0-9.1
Total domestic credit-42.78.434.6-104.9-14.3-68.526.45.232.18.56.87.2
Credit to government (net)-47.4-31.25.657.820.73.71.46.30.96.14.8-4.9
Credit to the economy 2/11.717.9-2.7-7.43.5-3.30.62.30.3-23.11.31.0
Source: Central Bank of Lesotho.

Includes rand notes and coins.

Claims on the rest of the economy and other items (net) affected by a write-off of bad loans in February 2003.

Source: Central Bank of Lesotho.

Includes rand notes and coins.

Claims on the rest of the economy and other items (net) affected by a write-off of bad loans in February 2003.

Table 14.Lesotho: Assets and Liabilities of the Central Bank of Lesotho, March 1997-September 2003(In millions of maloti; end of period)
1997199819992000200120022003
MarchMarchJuneSep.Dec.MarchJuneSep.
Foreign assets2,447.13,188.03,687.03,368.73,475.05,010.04,465.84,541.83,858.23,575.43,576.33,184.6
Claims on government293.3194.0201.8247.7108.8231.8192.0225.1191.3184.0196.1183.2
Claims on private sector9.410.411.213.113.813.413.513.513.513.213.813.8
Unclassified assets82.9140.247.549.271.9127.4100.3114.8141.5150.2147.4148.5
Total assets = total liabilities2,832.73,532.63,947.43,678.83,669.65,382.64,771.64,895.24,204.53,922.73,933.53,530.1
Reserve money254.8414.6530.6603.6748.6494.5477.9485.7500.9482.8552.7436.1
Maloti in circulation106.2107.3147.3129.8160.2196.2198.3209.3223.1210.3213.3222.9
Bankers’ deposits135.0289.3368.8458.3384.378.462.082.2105.4104.4173.034.7
Private and public deposits7.010.79.29.6199.7216.6213.3188.9162.1161.8160.3171.2
Rand notes and coins6.77.35.35.94.43.24.35.410.36.36.17.3
Foreign monetary liabilities276.7264.6351.0359.0395.6532.2521.1679.3646.7619.5510.0497.2
Government deposits1,934.72,248.32,128.41,695.21,175.41,528.81,432.91,322.81,257.3976.21,162.11,154.3
Capital accounts303.3449.0846.6917.01,296.22,566.32,340.62,381.41,771.81,580.91,682.81,408.6
Capital and reserves280.4423.8815.2883.91,258.42,512.22,289.52,329.41,728.11,540.21,643.51,371.8
Allocation of SDRs22.925.131.433.037.854.151.152.043740.739.336.8
Unclassified liabilities63.1156.290.9104.053.8260.7-0.926.027.7263.325.933.9
Source: Central Bank of Lesotho.
Source: Central Bank of Lesotho.
Table 15.Lesotho: Assets and Liabilities of Commercial Banks, March 1997-September 2003(In millions of maloti; end of period)
1997199819992000200120022003
MarchMarchJuneSep.Dec.MarchJuneSep.
Foreign assets256.0301.6466.0655.1638.1830.7857.3829.8772.3835.7651.1875.9
Reserves146.6316.2385.6491.5372.1135.7112.0110.6159.2287.8216.578.5
Maloti on hand20.416.721.218.717.732.130.027.943.431.737.534.7
Rand on hand6.77.35.35.94.43.24.35.410.36.36.17.3
Balances with central bank119.5292.2359.1466.9350.0100.477.877.3105.4249.8173.036.4
Claims on government61.257.235.2584.1559.3830.6794.2814.9808.4675.0960.7846.0
Claims on statutory bodies166.6130.4237.5109.548.140.242.153.542.836.738.940.7
Claims on private sector 1/701.5974.5822.9869.0941.4889.8900.2939.9957.2461.8487.6509.2
Unclassified assets323.0200.0325.7933.4334.0310.4262.1328.8400.4480.0486.0574.9
Total assets = total liabilities1,655.01,980.02,272.93,642.62,893.03,037.42,967.93,077.53,140.12,777.02,840.92,925.1
Foreign liabilities33.455.347.981.747.479.546.886.999.669.481.8132.8
Demand and call deposits 2/539.4730.0852.7871.5802.51,032.41,089.41,080.21,099.21,103.41,059.61,063.6
Savings and time deposits 2/693.9808.9765.4725.1677.7719.9750.9736.9727.2747.5858.6788.7
Government deposits50.947.461.474.472.044.635.559.363.973.180.571.9
Capital accounts44.5-127.2-42.3264.7346.5322.3319.0346.1287.4249.6253.4303.0
Unclassified liabilities 1/293.0465.7588.01,625.2947.0838.6726.3768.1862.9534.1507.0565.1
Source: Central Bank of Lesotho.

Claims on private sector and unclassified liabilities affected by a write-off of bad loans in February 2003.

Excludes Miners’ Deferred Pay Fund and nonresidents’ deposits.

Source: Central Bank of Lesotho.

Claims on private sector and unclassified liabilities affected by a write-off of bad loans in February 2003.

Excludes Miners’ Deferred Pay Fund and nonresidents’ deposits.

Table 16.Lesotho: Principal Aggregates of Commercial Banks’ Operations, March 1996-June 2003(In millions of maloti, unless otherwise specified; end of period)
Deposits 1/Loans and

Advances 2/
Credit-

Deposit

Ratio 3/
Liquid

Assets 4/
Liquidity

Ratio 5/
1996
March1,004.4807.780.4209.520.9
June1,076.8748.869.5247.523.0
September1,088.2786.872.3198.818.3
December1,191.8808.267.8316.526.6
1997
March1,182.0868.173.4203.817.2
June1,233.0865.670.2234.019.0
September1,282.1908.370.8304.623.8
December1,382.61,106.980.1487.635.3
1998
March1,491.01,105.074.1642.143.1
June1,499.31,105.673.7665.244.4
September1,430.91,052.873.6702.149.1
December1,582.41,055.266.7930.158.8
1999
March1,580.91,060.467.1845.553.5
June1,559.11,123.672.1742.347.6
September1,469.61,164.479.21,287.887.6
December1,506.8950.663.11,607.7106.7
2000
March1,548.4978.563.21,685.2108.8
June1,502.6970.964.61,635.7108.9
September1,469.4942.364.11,571.7107.0
December1,500.5948.363.21,522.2101.4
2001
March1,434.9960.766.91,240.386.4
June1,500.2968.064.51,204.280.3
September1,513.1954.363.1999.466.1
December1,599.3973.860.91,328.783.1
2002
March1,715.1930.054.21,561.886.9
June1,795.6942.352.41,455.877.6
September1,778.2994.455.91,607.585.7
December1,791.9999.955.81,565.082.8
2003
March 6/1,814.3498.527.51,708.788.8
June 6/1,870.2516.527.61,740.587.1
Source: Central Bank of Lesotho.

Excludes Miners’ Deferred Pay Fund and deposits of nonresidents.

Excludes loans and advances to nonresidents.

Loans and advances as a percentage of deposits.

Cash reserves, call or demand deposits with banks in the Common Monetary Area, and short-term government securities.

Liquid assets as percentage of deposits.

Numbers on loans and advances affected by nonperforming loans, which were written off in February 2003.

Source: Central Bank of Lesotho.

Excludes Miners’ Deferred Pay Fund and deposits of nonresidents.

Excludes loans and advances to nonresidents.

Loans and advances as a percentage of deposits.

Cash reserves, call or demand deposits with banks in the Common Monetary Area, and short-term government securities.

Liquid assets as percentage of deposits.

Numbers on loans and advances affected by nonperforming loans, which were written off in February 2003.

Table 17.Lesotho: Sectoral Distribution of Commercial Bank Credit to the Private Sector and Statutory Bodies, March 1996-June 2003 1/(In millions of maloti; end of period)
19961997199819992000200120022003
MarchMarchJuneSep.Dec.MarchJuneSep.Dec.MarchJune
Agriculture39.741.022.315.01.00.00.00.00.00.00.00.00.00.00.0
Mining and quarrying0.90.85.20.80.90.50.50.00.00.00.00.00.00.00.0
Manufacturing62.867.673.682.754.236.542.747.723.324.825.925.832.226.924.0
Electricity, gas, and water70.376.498.688.446.67.45.35.35.44.54.75.87.78.38.5
Construction146.8221.0208.6199.278.674.575.980.0119.382.0106.2112.896.692.886.1
Trade, hotels, and restaurants64.468.558.669.165.018.516.517.219.716.015.920.923.818.020.6
Transport, storage, and communications50.657.567.958.587.38.44.74.26.37.06.16.47.16.47.6
Nonbank financial institutions, real estate, and business services42.751.363.354.739.75.73.73.83.43.53.23.24.24.04.2
Community, social, and personal services36.137.566.057.758.98.99.17.66.36.24.719.623.721.723.0
Personal loans0.00.0415.2417.9432.0410.7135.9154.0139.5144.1166.7194.3195.3178.1174.1
Other 2/3/210.5235.4-52.8-62.613.2298.6541.0514.1530.2521.4488.3484.1488.835.361.3
Total claims on the economy725.0857.01,026.3981.5877.4869.7835.3833.8853.3809.5821.7872.9879.4391.5409.4
Private sector632.2690.4895.9744.0767.9821.6792.1790.9806.9769.3779.6819.4836.6354.8370.4
Business enterprises 3/426.2460.6480.8358.6337.9673.4640.5647.9651.5613.1624.9641.6649.3192.6195.0
Personal loans205.9229.8415.1385.4430.0148.2151.6143.0155.4156.2154.8177.8187.4162.1175.4
Statutory bodies92.8166.6130.4237.5109.548.143.242.946.440.242.153.542.836.738.9
Sources: Central Bank of Lesotho, Quarterly Reviews and Annual Reports; and staff estimates.

Does not include investments and certain securities.

Calculated as residual.

Numbers affected by nonperforming loans, which were written off in February 2003.

Sources: Central Bank of Lesotho, Quarterly Reviews and Annual Reports; and staff estimates.

Does not include investments and certain securities.

Calculated as residual.

Numbers affected by nonperforming loans, which were written off in February 2003.

Table 18.Lesotho: Interest Rates Paid by the Central Bank on Commercial Bank Deposits, March 1995-August 2001(In percent per annum; end of period)
Call31 Days88 Days6 Months1 Year
1995
March10.310.912.112.713.6
June11.011.512.813.214.5
September11.011.512.813.214.5
December11.011.512.813.214.5
1996
March11.011.512.813.214.5
June13.814.215.315.515.4
September13.613.914.114.114.0
December15.015.315.515.415.2
1997
March15.015.315.515.415.2
June13.614.214.514.514.5
September13.614.013.913.913.9
December13.213.613.713.513.5
1998
March12.612.912.912.812.7
June14.216.816.915.014.5
September19.319.720.520.620.6
December16.016.316.316.215.8
1999
March13.113.213.212.713.9
June11.411.711.711.712.0
September9.49.79.710.110.5
December8.99.39.69.710.1
2000
March7.98.38.58.79.6
June7.98.68.99.310.5
September8.08.78.89.09.5
December7.98.99.19.49.8
2001
March9.98.99.09.19.4
June8.88.28.48.58.8
August 1/8.57.88.28.28.3
Source: Central Bank of Lesotho.

In order to encourage commercial banks to invest in treasury bills, the Central Bank of Lesotho ceased to pay interest on commercial bank deposits starting in September 2001.

Source: Central Bank of Lesotho.

In order to encourage commercial banks to invest in treasury bills, the Central Bank of Lesotho ceased to pay interest on commercial bank deposits starting in September 2001.

Table 19.Lesotho: Interest Rates at Commercial Banks, March 1996-June 2003(In percent per annum; end of period)
19961997199819992000200120022003
MarchMarchJuneSep.Dec.MarchJuneSep.Dec.MarchJune
Lending rates 1/
Minimum16.518.517.119.617.017.016.716.316.316.317.017.317.717.716.5
Maximum26.528.127.125.327.025.325.024.724.724.725.324.026.026.023.2
Deposit rates
Savings deposits 2/6.26.06.04.03.54.04.04.04.04.04.04.04.04.03.5
Time deposits
31 days10.310.08.86.04.04.04.04.04.04.04.54.54.84.84.4
1 year13.611.310.56.95.56.06.06.06.06.06.06.06.36.35.5
Memorandum items:
South African rates
Prime overdraft18.520.319.320.014.514.513.813.013.013.013.017.017.017.015.0
Deposit rates
Notice (31 days)14.316.313.014.89.59.38.88.88.39.811.712.813.013.511.6
Fixed (12 months)13.515.412.613.710.510.39.68.88.911.512.814.013.012.910.0
Sources: Central Bank of Lesotho, Quarterly Review, and South African Reserve Bank, Quarterly Bulletin.

Minimum and maximum lending rates are not statutory rates; they simply indicate the range of interest rates reported by banks.

Minimum deposit rates; from December 1999, they are maximum deposit rates.

Sources: Central Bank of Lesotho, Quarterly Review, and South African Reserve Bank, Quarterly Bulletin.

Minimum and maximum lending rates are not statutory rates; they simply indicate the range of interest rates reported by banks.

Minimum deposit rates; from December 1999, they are maximum deposit rates.

Table 20.Lesotho: Comparative Money Market Rates, March 1996-June 2003(In percent per annum; end of period)
Discount RateTreasury Bills
CBL 1/SARB 2/LesothoSouth Africa
1996
March15.815.013.014.2
June15.816.015.515.7
September16.016.014.315.1
December17.017.014.316.1
1997
March17.017.015.715.8
June16.017.015.215.2
September16.617.014.214.7
December15.616.013.914.7
1998
March15.616.013.112.9
June17.016.017.218.8
September21.021.920.720.1
December19.519.316.617.0
1999
March19.516.515.514.4
June19.015.512.612.9
September19.012.610.510.8
December19.012.09.910.7
2000
March19.011.89.19.8
June19.011.89.110.4
September19.011.89.110.2
Decemberl5.011.89.310.3
2001
March15.012.09.310.3
June15.011.09.49.7
September13.09.58.58.9
December13.09.511.09.5
2002
March13.011.511.010.2
June13.012.510.011.4
September15.513.511.512.4
December16.213.512.212.4
2003
March18.513.513.112.7
June16.812.512.89.7
Source: Central Bank of Lesotho.

Central Bank of Lesotho.

South African Reserve Bank.

Source: Central Bank of Lesotho.

Central Bank of Lesotho.

South African Reserve Bank.

Table 21.Lesotho: Balance of Payments, 1996/97-2002/03 1/
1996/971997/981998/991999/002000/01200l/022002/03
(In millions of U.S. dollars)
Trade balance-798.3-822.0-589.9-608.0-493.8-367.7-441.3
Exports191.1197.3191.5188.4223.1293.7399.1
Imports, f.o.b-989.4-1019.3-781.4-796.4-716.9-661.4-840.4
Services (net)13.2-19.2-11.1-3.52.2-11.5-22.4
Receipts69.347.839.943.846.936.540.8
Payments-56.1-67.0-51.0-47.4-44.8-48.0-63.2
Income (net)314.6326.7242.6245.7211.4161.0185.6
Labor income (net)301.0318.5238.6244.7214.0165.3185.9
Receipts359.9377.4284.5278.2240.8189.0210.4
Of which: miners’ wages299.7316.0231.1224.0191.2148.6169.5
Payments-58.9-58.8-45.9-33.5-26.7-23.6-24.5
Investment income (net)13.78.14.01.0-2.6-4.3-0.2
Receipts67.768.664.844.134.023.525.4
Payments-54.1-60.4-60.8-43.1-36.6-27.8-25.6
Of which: interest on debt-13.3-14.2-17.8-17.4-21.0-13.5-12.9
Unrequited transfers185.9201.7139.5155.9127.4122.2139.8
Official183.3199.4136.9153.9125.0118.8134.9
Southern African Customs Union nonduty receipts154.5177.7115.2135.7109.4113.7118.5
Other grants18.311.911.68.16.65.010.2
Private2.62.32.72.12.43.44.9
Current account (including official transfers)-284.6-312.8-218.9-209.9-152.8-96.0-138.2
Capital and financial account52.2190.5431.2306.1266.2219.196.9
Capital account (transfers received)47.2210.1164.0101.637.329.337.4
Of which: LHWP 2/14.58.02.40.00.00.00.0
Financial account5.0-19.6267.2204.5228.9189.759.5
Direct investment45.137.8217.0153.9119.7107.192.6
Other investment73.323.6-2.3-31.332.589.0-24.4
Assets3.5-59.618.3-30.71.77.0-33.4
Liabilities69.883.3-20.5-0.730.882.08.9
Loans76.179.75.74.640.880.442.4
General government77.480.55.8-12.7-30.33.9-8.2
Disbursements95.493.726.115.021.029.427.5
Repayments-18.0-13.2-20.3-27.7-51.3-25.5-35.7
Private loans (net)-1.3-0.8-0.1-0.2-0.4-0.2-0.5
Other liabilities-6.33.6-26.2-5.3-10.01.6-33.5
Change in reserve assets (minus sign indicates increase)-113.4-81.052.582.076.8-6.4-8.7
Errors and omissions232.4122.3-212.4-96.2-113.4-123.141.3
Memorandum items:(In percent of GDP, unless otherwise indicated)
Current account (excluding official transfers)-49.7-50.7-40.7-36.5-33.1-29.9-33.0
Current account (including official transfers)-30.2-30.9-25.0-22.8-18.2-13.4-16.7
Gross official reserves (in millions of U.S. dollars)The0.00.00.00.00.00.0
Gross official reserves 3/5.88.77.97.46.75.34.3
Stock of external debt (in millions of U.S. dollars)573.1599.9639.0671.0581.0537.0601.0
Stock of external debt60.959.373.172.969.374.976.1
Debt-service ratio (in percent of exports, services, and factor income)4.54.06.68.113.37.55.7
Export growth (in percent) 4/28.04.12.5-4.018.535.524.5
Import growth (in percent) 4/5/5.70.0-27.831.80.75.516.8
Exchange rate (maloti per U.S. dollar, average)4.54.75.86.27.39.59.8
Sources: Central Bank of Lesotho, and staff estimates.

Fiscal year beginning in April.

Lesotho Highlands Water Project (LHWP).

In months of imports of goods and services.

In real terms.

Excludes LHWP imports

Sources: Central Bank of Lesotho, and staff estimates.

Fiscal year beginning in April.

Lesotho Highlands Water Project (LHWP).

In months of imports of goods and services.

In real terms.

Excludes LHWP imports

Table 22.Lesotho: Balance of Payments, 1996/97-2002/03 1/
1996/971997/981998/991999/002000/012001/022002/03
(In millions of maloti)
Trade balance-3,579.7-3,877.8-3,428.5-3,747.7-3,615.0-3,505.8-4,123.1
Exports856.8931.01,112.81,161.11,632.92,800.23,728.9
Imports, f.o.b.-4,436.5-4,808.8-4,541.3-4,908.8-5,247.9-6,306.0-7,851.9
Services (net)59.3-90.7-64.5-21.815.8-109.3-209.1
Receipts310.7225.4232.0270.3343.5348.2381.3
Payments-251.5-316.1-296.5-292.1-327.7-457.4-590.3
Income (net)1,410.91,541.21,410.11,514.31,547.71,535.11,734.4
Labor income (net)1,349.71,502.91,387.01,508.11,566.91,576.51,736.5
Receipts1,613.71,780.51,653.71,714.61,762.51,801.61,965.5
Of which: miners’ wages1,343.71,490.91,343.41,380.51,400.01,416.51,583.1
Payments-264.1-277.6-266.6-206.5-195.6-225.2-229.0
Investment income (net)61.238.323.06.2-19.3-41.4-2.2
Receipts303.7323.5376.5271.8248.8224.0237.2
Payments-242.5-285.1-353.5-265.5-268.1-265.4-239.4
Of which: interest on debt-59.6-67.1-103.2-107.0-154.0-128.4-120.3
Unrequited transfers833.5951.6811.0961.2932.71,164.81,1306.3
Official821.9940.6795.5948.5915.11,132.21,260.7
Southern African Customs Union nonduty receipts692.6838.3669.7836.5800.51,084.21,106.8
Rand compensation47.146.158.362.266.10.058.3
Other grants82.256.267.549.848.548.095.7
Private11.611.015.512.717.732.645.6
Current account (including official transfers)-1,276.1-1,475.8-1,272.0-1,294.0-1,118.9-915.3-1,291.4
Capital and financial account234.1725.82,091.61,635.21,178.8939.41,181.8
Capital account (transfers received)211.5991.2953.2626.2273.1279.8349.8
Of which: LHWP 2/65.137.714.10.00.00.00.0
Financial account22.6-265.41,138.41,009.0905.7659.6832.0
Direct investment202.2178.21,261.0948.5876.21,021.4865.2
Other investment328.7159.4-44.7-323.2-235.2-163.7-158.6
Assets15.7-281.3106.2-189.112.5-192.6-14.8
Liabilities313.0440.7-150.9-134.1-247.728.9-143.9
Loans341.4375.833.2-79.3-224.8-189.6-63.5
General government347.2379.733.7-78.0-221.820.419.4
Disbursements428.0442.2151.992.6154.0280.4257.0
Repayments-80.8-62.5-118.2-170.6-375.8-260.0-237.6
Private (net)-5.8-3.9-0.5-1.3-3.0-210.0-82.9
Other liabilities-28.464.9-184.1-54.8-22.9218.6-80.4
Change in reserve assets 3/-508.4-724.5-369.6320.8-61.8-1,329.31,229.0
Valuation changes on reserves (gains +)0.0121.5291.662.8326.61,131.1-1,103.5
Errors and omissions1,042.0750.0-819.6-141.2-60.0-24.1109.6
Memorandum items:(In percent of GDP, unless otherwise indicated)
Current account (including official transfers)-30.2-30.9-25.0-22.8-18.2-13.4-16.7
Net official reserves (in millions of maloti)2,310.33,034.03,284.72,987.83,038.33,236.53,111.1
Net official reserves (in months of imports) 4/6.711.08.67.26.14.94.9
Stock of external debt60.959.373.172.969.374.976.1
Debt-service ratio (in percent of exports, services, and factor income)4.54.06.68.113.37.55.7
Sources: Central Bank of Lesotho (CBL); and Fund staff estimates and projections.

Financial year is April-March.

Lesotho Highlands Water Project.

Transaction-based data that exclude the effects of exchange rate changes. A minus sign indicates increasing reserves.

Total import of goods and services excluding import by the Lesotho Highlands Water Project.

Sources: Central Bank of Lesotho (CBL); and Fund staff estimates and projections.

Financial year is April-March.

Lesotho Highlands Water Project.

Transaction-based data that exclude the effects of exchange rate changes. A minus sign indicates increasing reserves.

Total import of goods and services excluding import by the Lesotho Highlands Water Project.

Table 23.Lesotho: Services and Income Account, 1996/97-2002/03 1/(In millions of maloti)
1996/971997/981998/991999/002000/012001/022002/03
Nonfactor services (net)59.3-90.7-64.5-11.0-21.8-129.7-213.6
Credit310.7225.4232.0281.1303.2327.8374.6
Shipment0.00.00.00.00.00.00.0
Other transportation7.511.95.73.93.83.74.3
Travel114.2104.5109.2154.9165.5176.5210.0
Water royalties152.267.376.679.990.3100.8113.4
Other official35.937.140.844.347.550.851.1
Other private0.94.6-0.3-1.9-3.8-4.1-4.2
Debit-251.5-316.1-296.5-292.1-325.0-457.4-588.2
Shipment-167.6-186.8-175.8-190.3-200.7-242.4-298.7
Other transportation-17.7-16.2-17.0-21.0-21.9-22.7-24.3
Travel-58.9-61.9-83.2-69.3-67.8-89.1-161.9
Other official-3.3-43.6-16.4-12.3-28.6-101.9-102.6
Other private-4.0-7.6-4.10.7-5.9-1.3-0.7
Factor incomes (net)1,410.91,541.21,410.11,514.31,563.71,309.91,499.5
Credit1,917.42,103.92,030.21,986.42,029.41,800.51,970.8
Investment income303.7323.5376.5271.8248.8224.0237.2
Interest earned by commercial banks61.127.927.928.939.754.666.0
Interest earned by the central bank242.6295.5348.7242.9209.2169.4171.2
Labor income1,613.71,780.51,653.71,714.61,780.61,576.51,733.6
Debit-506.6-562.7-620.1-472.1-465.7-490.6-471.3
Investment income-242.5-285.1-353.5-265.5-263.9-265.4-239.4
Dividends and profits-183.0-218.1-250.3-158.6-114.1-137.0-119.2
Interest-59.6-67.1-103.2-107.0-149.8-128.4-120.3
Labor income-264.1-277.6-266.6-206.5-201.8-225.2-231.9
Total services and income (net)1,470.11,450.51,345.61,503.31,541.91,751.81,518.3
Source: Central Bank of Lesotho.

Financial year is April-March.

Source: Central Bank of Lesotho.

Financial year is April-March.

Table 24.Lesotho: Lesotho Miners in South Africa, 1997-2002
199719981999200020012002
Total average number employed (in thousands)95.980.468.664.961.462.2
Annual percentage change-5.3-16.2-14.7-5.4-5.41.3
Of which: employed through TEBA 1/
Average number (in thousands)78.866.255.451.749.952.4
Annual percentage change-8.1-16.0-16.3-6.7-3.44.9
Employed through TEBA/total employed (in percent)82.281.880.779.783.484.4
Average annual earnings (in maloti) 2/21,19324,67827,65730,13132,03035,326
Annual percentage change10.516.412.18.96.310.3
Total earnings (in millions of maloti)2,032.41,984.11,897.31,955.51,966.62,197.3
Annual percentage change4.6-2.4-4.43.10.611.7
Miners’ remittances (in millions of maloti) 3/1,449.11,414.71,352.81,394.31,402.21,566.7
Miners’ remittances (as percentage of total earnings)71.371.371.371.371.371.3
Miners’ remittances (annual percentage change)4.6-2.4-4.43.10.611.7
Sources: Central Bank of Lesotho; Department of Labor; and the Employment Bureau for Africa.

The Employment Bureau for Africa, an agency of the South African Chamber of Mines.

Average for Lesotho miners, including overtime payments and repatriation allowances, as reported by the South African Chamber of Mines.

Estimated by the Central Bank of Lesotho as approximately 71 percent of total earnings, except for 1997 and 1998, which are based on incomplete data of the Department of Labor published in the central bank’s Quarterly Review.

Sources: Central Bank of Lesotho; Department of Labor; and the Employment Bureau for Africa.

The Employment Bureau for Africa, an agency of the South African Chamber of Mines.

Average for Lesotho miners, including overtime payments and repatriation allowances, as reported by the South African Chamber of Mines.

Estimated by the Central Bank of Lesotho as approximately 71 percent of total earnings, except for 1997 and 1998, which are based on incomplete data of the Department of Labor published in the central bank’s Quarterly Review.

Table 25.Lesotho: Composition of Recorded Exports, 1996-2002
1996199719981999200020012002
(In millions of maloti, unless otherwise indicated)
Foodstuffs, etc.23.241.840.7119.3111.7141.3197.6
Cereals7.618.016.236.228.044.975.7
Beans, peas, and other vegetables1.35.24.92.31.10.20.4
Animal feed8.515.74.22.43.84.35.6
Beverages and tobacco0.30.111.373.463.972.694.9
Other foodstuffs5.42.74.05.015.019.321.1
Live animals1.84.57.06.56.612.920.4
Cattle1.62.33.13.04.99.713.4
Sheep and goats0.00.00.00.10.00.10.3
Pigs0.00.00.00.00.00.20.8
Poultry0.22.13.93.51.72.95.9
Livestock materials24.829.218.815.537.060.164.6
Wool17.123.616.714.632.256.856.1
Mohair7.04.81.20.94.11.30.0
Hides and skins0.70.70.90.10.72.08.5
Crude materials0.00.00.00.00.00.00.0
Diamonds1.61.30.50.71.71.53.8
Manufactures543.8826.9760.6908.01,307.82,204.63,439.8
Chemicals and petroleum17.316.76.65.86.518.645.5
Leather products0.30.00.00.20.31.03.0
Wood products0.30.10.50.10.10.20.7
Yam and textiles, etc.4.96.45.62.41.42.97.1
Road vehicles18.632.415.54.811.317.729.6
Furniture and parts8.611.24.95.99.526.037.4
Clothing, etc.296.4408.7415.4612.5953.21,722.52,745.2
Footwear101.4174.4176.5143.5132.6124.4135.1
Other manufactures95.9176.9135.6132.7192.8291.3436.1
Unclassified217.00.3231.14.03.15.513.7
Total value812.1904.01,058.61,054.11,467.92,426.03,739.9
Wool (in metric tons)2,082.51,861.3950.8
Mohair (in metric tons)373.7258.51,999.2
Diamonds (in thousands of carats)1.20.60.4
Value per carat (in maloti)169.5136.1164.1
Source: Central Bank of Lesotho.
Source: Central Bank of Lesotho.
Table 26.Lesotho: Direction of Trade, 1998 - 2002 1/(In millions of maloti)
19981999200020012002
ImportsExportsImportsExportsImportsExportsImportsExportsImportsExports
World5,199.91,071.15,288.81,054.15,611.21,468.36,399.82,426.08,517.53,739.9
Africa4,615.7690.04,737.7555.04,876.9607.55306.0899.16,270.3856.4
Common customs area4,614.9689.54,736.4554.54,309.3606.95,296.6897.06,261.7856.0
Other Africa0.81.31.31.66.90.73.02.11.60.2
Europe119.96.097.82.145.81.846.53.593.28.1
European Union105.76.083.71.942.71.844.53.582.57.8
Belgium2.70.04.10.21.40.20.40.13.90.0
Denmark1.30.01.50.40.80.01.70.09.20.0
France5.10.04.30.00.40.02.90.14.60.0
Germany49.05.223.71.26.40.720.90.09.42.2
Italy0.10.017.50.05.50.05.00.016.00.0
Netherlands16.40.01.70.03.10.00.00.00.00.0
United Kingdom31.10.527.60.114.10.90.60.024.90.0
Spain0.00.03.30.06.70.011.90.011.30.9
Portugal0.00.00.00.04.30.00.03.20.04.6
Other Europe14.20.314.10.23.10.02.00.010.70.3
North America 2/70.1371.650.0494.9104.8858.341.71,522.553.42,874.6
Canada45.13.841.95.797.222.534.535.012.115.9
United States25.0357.88.1489.27.6835.87.21,487.541.32,858.7
Asia370.91.6372.40.2526.00.6953.30.92,021.60.8
Japan56.20.023.30.034.60.011.60.433.20.0
Hong Kong SAR22.20.031.00.170.30.0224.30.0483.80.0
China0.61.40.20.10.00.074.20.0355.70.0
Taiwan Province of China203.10.2192.20.0294.60.6527.10.0913.20.8
Israel0.00.00.00.00.00.00.00.00.00.0
Other88.80.0125.70.0126.50.0109.80.5192.50.0
Oceania23.30.030.90.957.70.152.20.079.00.0
Source: Central Bank of Lesotho.

Imports are c.i.f., duty exclusive, and excluding donated food; exports are f.o.b.

Almost all of these exports are to the United States.

Source: Central Bank of Lesotho.

Imports are c.i.f., duty exclusive, and excluding donated food; exports are f.o.b.

Almost all of these exports are to the United States.

Table 27.Lesotho: Public and Publicly Guaranteed External Debt Outstanding, 1996/97-2002/03 1/
1996/971997/981998/991999/002000/012001/022002/03
(In millions of U.S. dollars)
Multilateral sources439.2442.2449.7446.7423.4428.6485.5
World Bank Group157.0163.7178.7184.6181.2191.0222.9
African Development Bank18.315.113.612.59.27.56.7
African Development Fund149.8150.3153.8154.5147.1148.2162.5
European Union41.942.039.539.535.229.537.8
IMF32.026.119.914.612.917.520.3
Other40.245.044.241.137.934.935.2
Bilateral sources73.273.698.899.457.351.651.5
Commercial60.784.190.5124.5100.257.064.4
Commercial banks28.842.344.266.251.537.747.1
Export credits11.39.612.625.022.919.217.3
Other20.632.233.733.325.80.00.0
Total573.1599.9639.0670.6580.8537.2601.3
(As percent of total debt, unless otherwise indicated)
Multilateral76.673.770.466.672.979.880.7
Bilateral12.812.315.514.89.99.68.6
Commercial10.614.014.218.617.210.610.7
(As percent of GDP)
Multilateral46.743.751.448.650.559.761.4
Bilateral7.87.311.310.86.87.26.5
Commercial6.48.310.413.511.97.98.1
Total60.959.373.172.969.374.976.1
Memorandum items:(In units indicated)
External debt/GDP ratio (in percent)60.959.373.172.969.374.976.1
GDP (in millions of maloti)4,220.24,770.05,081.85,668.76,137.26,839.17,731.4
Maloti per U.S. dollar (period average)4.54.75.86.27.39.59.8
Sources: External Debt Unit, Ministry of Finance; and staff estimates.

End of fiscal year (April-March).

Sources: External Debt Unit, Ministry of Finance; and staff estimates.

End of fiscal year (April-March).

Lesotho: Summary of the Tax System, July 2003
(All amounts in maloti)
TaxNature of TaxExemptions and DeductionsRates
1.Taxes on net income and profits
1.1Taxes on companies, corporations, or enterprises
1.1.1Income tax
Income Tax Act 1993, Order No. 9 of 1993 (this act repeals the 1981 Income Tax Act);

Income Tax (Amendment) Act 1994; and Income Tax (Amendment) Act 1996.
A tax on the current year’s income from all gcographical sources (in the case of resident companies) including on specified fringe benefits to employees, Dividends paid by a resident company to a resident shareholder are exempt but advance corporate tax applies.Deductions include normal operating costs, expenditures for repair and maintenance, and depreciation of plant and machinery. Expenditure on the training of Basotho workers is deductible up to 125 percent of actual expenditure incurred. The income of pension funds, life insurance companies, and charitable institutions is exempt.For all sectors of activity other than manufacturing, 35 percent; a reduced rate (15 percent) is applicable to all manufacturing companies other than those approved for pioneering industries’ benefits before August 3. 1990 (see Item 6, below).



For nonresident companies, 25 percent.
1.1.2Gambling levy
The Casino Act, No. 26 of 1969; Legal Order No. 42 of 1971. Casino Order No. 4 of 1989.A levy on gross profits of gambling casinos.15 percent.
1.2Taxes on individuals
1.2.1Income tax

Income Tax Act 1993.
A tax on the current year’s income from all geographical sources (in the case of residents).



Gross income includes incomes in kind, except for benefits subject to fringe benefits tax.



Tax is withheld at source at a rate of 10 percent on interest paid (in excess of the exempt amounts) and at 5 percent on payments made by government to Lesotho resident contractors and subcontractors. Such amounts are a credit against the final amount of tax assessed for the recipient.
Exempt incomes include: the first M 500 of interest from savings; income from subsistence farming; scholarships; and foreign- source property income of expatriate taxpayers.



Deductions include expenses of deriving income.



A uniform personal tax credit of M 2,640 per taxpayer was introduced in April 1996.
Residents marginal rate (in percent):

First M, 30,00025 percent
Over M, 30,00035 percent


Nonresidents marginal rate (in percent):



All chargeable
Income25 percent
1.2.2Withholding

tax Income Tax Act 1993.
A tax on income from dividends, interest, royalties, natural resource payments, management charges, or services contracts earned within Lesotho by nonresidents.Dividends from manufacturing companies are exempt.With bolding tax is 25 percent.



For royalties from non manufacturing companies, 15percent. On service contracts earned within Lesotho by nonresidents, 10 percent
1.2.3Income Tax (Amendment Act, 1999)A tax on farm income.Rated at 15 percent.
1.2.4Income Tax (Amendment Act, 2000)Taxation of activities by Lesotho Highlands Development Authority (LHDA) in terms of Protocol V to the Lesotho Highlands Water Treaty.Exemptions as specified in Protocol V to the Lesotho Highlands Water Treaty between Lesotho and South Africa.Differential rates applied to companies contracted by LHDA
2.Taxes on property
2.1Property rates

Valuation and Rating Act 1980; Urban Government Act 1993; and Legal Notice No. 10 of 1997.
Taxes on urban land and improvements based on capital value of property, as assessed periodically. Improvements valued on basis of depreciated replacement value.These taxes are currently applied only within Maseru, Teyateyaneng, and Mafeteng. Government property is subject to a grant in lieu.Rates of 0.25 percent on residential property; 2.0 percent on commercial property; and 2.75 percent on industrial property.
2.2Ground rents

Land Act No. 17 of 1979; Land Regulations, Legal Notice No. IS of 1980; and Legal Notice No. 131 of 1991.
A fee for use right to occupy land. Charged according to area of land and location.Owner-occupiers are exempted.M 0.05–0.10 per annum sqnare meter for residential land; M 0.25–0.30 per aunumper square meter for commercial land. Levy of 5 percent for late payment.
2.3Death taxes
2.3.1Estate duty Proclamation No. 20 of 1935 as amended.A duty paid by the estate in respect of property passing on the death of the person who owned the property at the time of death.Any amount received under an insurance policy is not subject to tax.Three ten thousandths M 2 for every M 200 or part thereof, subject to a maximum rate of M 0.67 per M 2. A rebate of M 600 is deducted from the amount of duty calculated.
2.3.2Succession duty
Proclamation No. 20 of 1935 as amended.A duty levied on all successions accruing to any person.Successions accruing to a surviving spouse, to the Lesotho government, and to nonprofit public institutions within Lesotho are exempt.A rate of duty varying according to the degree of relationship of the successor from 3 percent to 12 percent of the dutiable amount: A 1 percent surcharge is levied on dutiable successions exceeding M 20,000.
2.4Transfer duty Transfer Duty Act, 1965, No. 7 of 1966; Transfer Duty Order, 1972, Order No. 1 of l972.A duty levied on the transfer of immovable property (including lease contracts for at least ten years and any rights to minerals).The following are exempt: the Lesotho government and its departments, the Lesotho Electricity Corporation, the Lesotho Bank, the Lesotho Airways Corporation, the Lesotho National Development Corporation; local authorities; nonprofit public institutions and public hospitals; and a surviving spouse for the estate of a deceased spouse.A duty of 3 percent on the first M 10,000 of value and 4 percent on the excess value.
3.Taxes on goods and services



3.1 Value-Added Tax (VAT) Value-Added Tax Act No. 9 of 2001 (as amended), implemented from July 1 2003 (this act repealed the Sales Tax Act 1995). VAT (Amendment) Act No. 6 of 2003
A value-added tax imposed on every taxable supply in Lesotho and every import of goods and services. The act provides for the application of a relevant rate of VAT to the taxable value of a transaction. The rate of VAT imposed on an export of goods or services from Lesotho by a vendor is zero. Credit is allowed for input tax on utilities (electricity and telecommunications). Four rates are chargeable, including a zero rate. Determination and duration of the zero rate is dictated by the extent to which such items are regarded as basic necessities. Zero rates are also allowed where goods are supplied in the course of repairing, renovating, or modifying a taxable supply.Under Section 6(2), the act exempts from VAT imports of goods prescribed in schedule II (diplomatic, heads of state and other foreign representative purchases, passengers baggage = household furniture and used personal and sporting and recreational equipment, effects of new residents, relief and supplies, temporary imports, etc.); and import of goods and services that would be exempt if supplied in Lesotho. It further exempts the following supplies: supply of public, postal, transportation, medical or dental, financial, insurance or education services; supply of unimproved land; supply by way of lease or letting of immovable property where (i) the tenant is a manufacturer; (ii) the property is used by the manufacturer principally for carrying on a manufacturing enterprise; (iii) the supply is of low-income housing development schemes by an association, co-operative of scheme; (iv) the supply of any accommodation in a dwelling under an agreement for the leasing, letting, hiring or sale of accommodation; (v) the supply of a hostel or boarding establishment, which operates as a nonprofit- making establishment; supply of water and any supply prescribed by the minister in regulations as an exempt supply Also exempted is: supply by an amateur sporting organization of sport activities, where such activities are deemed for the purpose of this act to be nonprofessional: supply of cultural activities provided that such activity is a nonprofit supply or service; and supply of charity arrangements undertaken by an organization or institution deemed by the Commissioner General to engage in or conduct charitable activities or work, provided that after such event, audited accounts are filed with Lesotho Revenue Authority; and where such arrangements were made by a permanent establishment, such establishment shall first apply for exemption at least two months after the end of the financial year.The existing rates are:
GoodsRate (in percent)
General14
Liquor15
Telecommunications, water and electricity5
Exportsnil
Zero-rated basic itemsnil


Zero-rated basic items are:
  • Agricultural inputs (fertilizers, seeds, pesticides, etc.)
  • Beans
  • Bread
  • Lentils
  • Livestock, feed and poultry feed
  • Maize (grain)
  • Maize meal
  • Milk
  • Paraffin (for use as fuel for cooking, illuminating or heating)
  • Peas
  • Sorghum meal
  • Unmalted sorghum grain
  • Wheat grain
  • Wheat flour
3.2Excise taxes
Customs and Excise Consolidated Act, No. 10 of 1982.A tax on certain goods manufactured and imported into Lesotho, including beer, spirits, wines, matches, tobacco, cigars, cigarettes, petroleum oils, motor vehicles, tractors and electronic products such as televisions.Exports and purchases by charitable organizations are exempt.Both specific and ad valorem rates.
3.3Trade licenses Trading Enterprises Regulations 1999; Trading Enterprise Order, 1993.Payable by traders carrying on business.Charitable, religious, and nonprofit institutions are exempt.Ranging from M 500 to M 1,000 for foreigners and M 75 to M 500 for nationals depending on the type and size of establishment.
3.4Petrol levy
Fuel and Service Control Act 1983, No. 23 of 1983. Section 3(d) empowers the Minister to impose and collect a levy on fuel Amended by Legal Notice No. 63, August 1988.A levy on petrol of all grades or distillate supplied by any person.Paraffin (kerosene) is exempt.Rates are 43 lisente per liter on petrol sold to public for private cars, and 37 lisente per liter for diesel used in industry, agriculture, and public buses. In addition, there is an Equalization Fund levy of 3 lisente per liter.
4.Taxes on international trade and transactions
4.1Customs duties Customs and Excise Act, No. 10 of 1982.A duty on all goods imported into Lesotho. A three-column tariff schedule based on the Customs Cooperation Council (CCC) nomenclature with fiscal, general, and most-favored nation (MFN) rates of duty used. Goods originating from countries enjoying MFN status pay the fiscal and customs duties. There is no preferential rate of duty.Free trade agreements with Botswana, Namibia, South Africa, and Swaziland.Ad valorem duties charged on the domestic value of goods at varying rates
Customs Union Agreements, Legal Notice No. 71 of 1969 (effective March 1, 1970).A duty collected by the Republic of South Africa and other partners (at port of arrival) and contributed to a common customs union pool held with Botswana, Namibia, South Africa, and Swaziland. Lesotho’s share is calculated according to a fixed formula that has been revised but is yet to be ratified by members.
4.2Livestock importation levy Legal Notice No 196 of 1991.A duty collected by the Ministry of Agriculture when the import permits are issued.For private persons: M 30 and M 15for each head of large and small stock, respectively. For Iicenscd butchers M 7.50 and M 3.75 for each head of large and small stock, respectively.
4.3Mineral levyRoyalty paid to the state based on the selling price of the product.0.05 percent of the selling price of the product.
4.4Diamond sales tax
Precious Stones Order 1970, No. 24 of 1970.A sales tax on the value of every diamond found in Lesotho and exported there from.Diamonds exported solely for exhibition or display purposes are exempt or for commercial mines of which royalty is negotiated.15 percent of the true market value of every diamond.
5.Other taxes
5.1Attestation feesFees on registration of migrant Basotho workers in South African names.M 10.15 per contract of 120 to 270 working days, payable at the time of worker’s departure for mines.
5.2Stamp duty
Proclamation 16/07 as amended: Stamp Duties (Amendment) Order No. 20 of 1972; and Legal Notice No. 58 of 1988Duties levied on a range of instruments, including arbitrations and awards, bills of exchange, bonds, acts or deeds of donation, leases, transfers, and insurance policies.The Lesotho government and its departments, the Lesotho Electricity Corporation, and the Lesotho Bank, are exempt.Rates of duty varying depending on the nature of the instrument, the matter to which it relates, and its value.
5.3Toll gate fees
Toll Gate Act of 1976. Legal Notice No. 18 of 1988; and Legal Notice No. 1 of 1992.Fees levied on vehicles leaving Lesotho.Ministers on duty, His Majesty, ambulances, and South African Railway vehicles are exempt.M 5 for cars, M 6 for trucks, applied each time leaving Lesotho.
6.Pioneer industries
Pioneer Industries Encouragement Act, 1969, No. 19 of 1969, as amended.Applicable to manufacturers and related industries and building companies establishing their operations in Lesotho, that had already been approved for tax benefits to encourage pioneering industries by August 3, 1990.An approved existing manufacturer or a hotel or casinokeeper is limited to the package of allowances. The incentives can be revoked, varied, or extended according to the performance of the approved manufacturer, with the approval of the Minister of Trade.15 percent charged to manufacturing companies and 35 percent to other companies.
Source: Ministry of Finance.
Source: Ministry of Finance.
APPENDIX II Lesotho: Exchange and Trade System
(position as of July, 2003)
Subject MeasureExistenceDescription
I. Status Under IMF Articles of Agreement
July 25, 1968.
Date of membership
I. Article VIIIYesDate of acceptance: March 5, 1997.
2. Article XIVNo
II. Exchange Arrangements
1. CurrencyYesThe currency of Lesotho is the Lesotho loti.
Other legal lenderYesThe South African rand is also legal tender.
2. Exchange rate structure
UnitaryYes
Dual
Multiple
3. Classification
Exchange rate, no separate legal tender
Currency board arrangementsn.a.
Conventional pegged arrangementYesThe loti is pegged to the South African rand at M 1 per R 1.
Pegged exchange rate within bands
Crawling peg
Crawling band
Managed floating, no preannounced path
Independently floating
4. Exchange taxNo
5. Exchange subsidyNo
6. Forward exchange marketYesAuthorized dealers are permitted to conduct forward exchange operations through their correspondent banks abroad at rates quoted by the latter. Forward exchange cover, however, is not common in Lesotho.
Official coveragen.a.
III. Arrangements for Payments and Receipts
1. Prescription of currency requirementsYesSettlements by or to residents of the Common Monetary Area (CMA) with all countries outside the CMA may be made in rand, to and from a nonresident account, and in any foreign currency.
2. Payments arrangementsYes
Bilateral payment agreementNo
OperativeNo
InoperativeNo
Regional arrangementYesAs Lesotho is part of the CMA, payments within the CMA arc unrestricted and unrecorded except for statistical and customs purposes. In its relations with countries outside the CMA, Lesotho applies exchange controls that are largely similar to those applied by South Africa, Swaziland and Namibia.
Clearing agreementNo
Barter agreement and open accountsNo
3. Administration of controlYesThe Central Bank of Lesotho (CBL) controls foreign exchange transactions and delegates to commercial banks the authority to approve certain types of current payments up to established limits. Permits are issued by the Department of Customs and Excise based on the recommendation of the Department of Trade and Industry. Licenses for financial institutions accepting deposits, as well as for insurance companies, brokers, and agents, are issued by the CBL.
4. International security restrictionsNo
In accordance with Executive Board decision No. 144(52/51)No
According to UN SanctionsNo
5. Payment arrearsNo
OfficialNo
PrivateNo
6. Controls on trade in gold (coins/bullions)Yes
On domestic ownership/tradeYesOnly authorized dealers may trade in gold, but anyone may hold gold.
On external tradeYesExports of gold from the CMA are prohibited.
7. Controls on banknotesYes
On exportsYes
Domestic currencyYesExports of currency from Lesotho are prohibited.
Foreign currencyYesExports of foreign currency from the CMA by residents are prohibited; visitors may reexport the unspent portion of foreign currency brought into the country.
On importsNo
Domestic currencyNo
Foreign currencyNo
IV. Resident Accounts
1. Foreign exchange accounts permittedYesBanks may hold foreign exchange accounts abroad.
Held domesticallyYes
Approval requiredNo
Held abroadYesOnly banks may hold these accounts.
Approval requiredNo
2. Accounts in domestic currency convertible in foreign currencyYesApproval is required.
V. Nonresident Accounts
1. Foreign exchange accounts permittedYesLoti accounts of nonresidents are divided into nonresident accounts and emigrant blocked accounts.
Approval requiredYes
2. Domestic currency accountsYes
Convertible into foreign currencyYes
Approval requiredYes
3. Blocked accountsYesFunds in emigrant blocked loti accounts may be invested in quoted securities and other such investments approved by the CBL. The free transfer of income from an emigrant’s blocked assets is limited to M 300,000 a family unit a year.
VI. Imports and Import Payments
1. Foreign exchange budgetNo
2. Financing requirements for importsYes
Minimum financing requirementsNo
Advance payments requirementsYesPayments are not normally allowed before the date of shipment or dispatch, except with the prior approval or special authorization from the CBL. Authorized dealers can permit, without the CBL’s approval, advance payment of up to 33.3 percent of the ex-factory cost of capital goods if suppliers require it or if it is normal practice in the trade concerned.
Advance import depositsNo
3. Documentation for release of foreign exchange for imports
Domiciliation requirementsYes
Preshipment inspectionYes
Letters of creditYes
Import licenses used as exchange licensesYes
OtherYes
4. Import licenses and other nontariff measuresYesLesotho is a member of the Southern African Customs Union (SACU), and all imports, except certain food imports, originating in any country of the SACU are unrestricted, Imports from countries outside the SACU are usually licensed in conformity with the import regulations of the SACU. Lesotho reserves the right to restrict certain imports. Import permits are valid for all countries and entitle the holder to buy the foreign exchange required to make payments for imports from outside the SACU.
Positive listNo
Negative listYesWith certain exceptions, imports from outside the SACU must conform to a negative list and be licensed (for example, ammuuition, flora and fauna, illegal drugs, etc.).
Open general licensesNo
Licenses with quotasYesCertain food imports from within the SACU are subject to import licensing.
Other nontariff measuresNo
5. Import taxes/tariffsYesLesotho applies the external customs tariffs of the SACU
Taxes collected through the exchange systemNo
6. State import monopolyNo
VII. Exports and Export Proceeds
1. Repatriation requirementsYesAll export proceeds must be repatriated within six months.
Surrender requirementsYesUnless otherwise permitted, all export proceeds must be surrendered to authorized dealers within six months of the date of the export transaction.
2. Financing requirementsYesA state-supported export credit scheme is in effect, involving credit guarantees, and pre-and postshipment credits.
3. Documentation requirementsYes
Letter of creditYes
GuaranteesYes
DomiciliationYes
Preshipment inspectionYes
OtherNo
4. Export licensesYes
Without quotasYesCertain exports are subject to licensing for revenue purposes; this requirement, in practice, is limited to the exportation of diamonds. Most exports are shipped without license to or through South Africa.
With quotasNo
5. Export taxesNo
Collected through the exchange systemNo
Other export taxesNo
VIII. Payments for Invisible Transactions and Current Transfers
Controls on these paymentsNo
1. Trade-related paymentsNo
Prior approvalNo
Quantitative limitsNo
Indicative limits/bona fide testsNo
2. Investment-related paymentsYesProfit and dividend transfers are not restricted, provided the funds were not obtained through excessive use of local borrowing facilities. Information is not available for payment of amortization of loans or depreciation of direct investments.
Prior approvalYes
Quantitative limitsYesEmigrants are allowed to transfer through normal banking channels, up to M 300,000 of earnings on blocked assets.
Indicative limits/bona fide testsNoThere is no indicative limit or bona fide test for the payment of commissions.
3. Payments for travelYes
Prior approvalYes
Quantitative limitsYesThere is a limit of M 130,000 for adults and M 40,000 for children under 12 years of age, per calendar year.
Indicative limits/bona fide testsYesLarger allowances may be obtained for business travel.
4. Personal paymentsYes
Prior approvalYesThere is prior approval for payment of study abroad costs.
Quantitative limitsYesFor studies abroad the limits are M 160,000 per annum for a single student or M 180,000 per annum for a student accompanied by a spouse who is not studying.
Indicative limits/bona fide testsNo
5. Foreign workers’ wagesNo
Prior approvalNo
Quantitative limitsNo
Indicative limits/bona fide testsNo
6. Credit card use abroadNo
Prior approvalNo
Quantitative limitsNo
Indicative limits/bona fide testsNo
7. Other paymentsNo
Prior approvalNo
Quantitative limitsNo
Indicative limits/bona fide testsNo
IX. Proceeds from Invisible Transactions and Current Transfers
1. Repatriation requirementsNo
Surrender requirementsYesProceeds must be surrendered within 180 days of the date of accrual, unless an exemption is obtained.
2. Restrictions on use of fundsNo
X. Capital Transactions
1. Controls on capital and money market instrumentsYes
On capital market securitiesYes
Shares or other securities of a participating natureYes
Purchase locally by nonresidentsYes
Sale or issue locally by nonresidentsYes
Purchase abroad by residentsYes
Sale or issue abroad by residentsYes
Bonds or other debt securitiesYes
Purchase locally by nonresidentsNo
Sale or issue locally by nonresidentsNo
Purchase abroad by residentsYes
Sale or issue abroad by residentsYes
On money market instrumentsYes
Purchase locally by nonresidentsNo
Sale or issue locally by nonresidentsNo
Purchase abroad by residentsYes
Sale or issue abroad by residentsYes
On collective investment securitiesNo
Purchase locally by nonresidentsNo
Sale or issue locally by nonresidentsNo
Purchase abroad by residentsYes
Sale or issue abroad by residentsYes
2. Controls on derivatives and other instrumentsn.a.
Purchase locally by nonresidentsn.a.
Sale or issue locally by nonresidentsn.a.
Purchase abroad by residentsn.a.
Sale or issue abroad by residentsn.a.
3. Controls on credit operationsYes
Commercial creditYes
By residents to nonresidentsYesExport credits are available for up to six months; in certain circumstances, the maturity can be extended by six months. Longer-term credits require exchange control approval.
To residents from nonresidentsYesThese credits require exchange control approval.
Financial creditYes
By residents to nonresidentsYesThese credits require prior approval. However, nonresident, wholly owned subsidiaries may borrow locally up to 100 percent of the total shareholder’s investment.
To residents from nonresidentsYesPrior approval is required to ensure that repayments and servicing of the loans do not disrupt the balance of payments and to ensure that the level of interest rates paid is reasonable in terms of prevailing international rates.
Guarantees, sureties, and financial backup securitiesNo
By residents to nonresidentsNo
To residents from nonresidentsNo
4. Controls on direct investmentYesThe rulings on applications for inward and outward capital transfers may depend on whether the applicant is a temporary resident foreign national, a nonresident, or a resident.
Outward direct investmentYesOutward direct investment is prohibited.
Inward direct investmentNo
5. Controls on liquidation of direct investmentNo
6. Controls on real estate transactionsYes
Purchase abroad by residentsYesPrior approval is required.
Purchase locally by nonresidentsNo
Sales locally by nonresidentsNo
7. Controls on personal capital movementsNo
LoansNo
By residents to nonresidentsNo
To residents from nonresidentsNo
Gifts, endowments, inheritances, and legaciesNo
By residents to nonresidentsNo
To residents from nonresidentsNo
Settlements of debt abroad by immigrantsNo
Transfer of assetsNo
Transfer abroad by emigrantsNo
Transfer into the country by immigrantsNo
Transfer of gambling/prize earningsYesPrior approval is required.
8. Specific controls on transactions by commercial banks and other credit institutionsYes
Borrowing abroadYesPrior approval is required.
Maintenance of accounts abroadYes
Lending to nonresidents (loans, financial or commercial credit)Yes
Lending locally in foreign exchange to residentsYes
Purchase of locally issued securities denominated in foreign exchangeYes
Differential treatment of deposit accounts in foreign exchangeNo
Reserve requirementsYes
Liquid asset requirementsYes
Interest rate controlsNo
Credit controlsNo
Differential treatment of nonresident deposit accounts or deposit accounts in foreign exchangeNo
Reserve requirementsNo
Liquid asset requirementsNo
Interest rate controlsNo
Credit controlsNo
Investment regulationsNo
Abroad by banksNo
In banks by nonresidentsNo
Open foreign exchange position limitsYes10 percent single limit and 20 percent overall exposure.
On nonresident assets and liabilitiesYes
On resident assets and liabilitiesYes
9. Provisions specific to institutional investorsYes
Limits (max.) on securities issued by nonresidents and on portfolio invested abroadNo
Limits (max.) on portfolio invested abroadNo
Limits (min.) on portfolio invested locallyNo
Currently matching regulations on assets/liabilities compositionNo
10. Other controls imposed by securities’ lawsNo
34Prepared by Lars Engstrom.
35Some assessments indicate that the customs pool would drop by about 40 percent in 2005/06 if SACU were to reduce its most-favored-nation (MFN) tariffs at a similar rate as the new tariff schedule agreed by the EU and South Africa.

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