JOHANNESBURG
Lesotho is expected to experience relatively good economic growth and falling inflation in 2003-04 in line with its neighbour, South Africa, the Economist Intelligence Unit (EIU) has forecast.
In its latest country outlook, the EIU said the electoral dominance of the ruling Lesotho Congress for Democracy was likely to continue despite recent "unrest among the old guard".
"The Prime Minister, Pakalitha Mosisili, has re-established control over the party. The likelihood of a split in the party seems remote as such breakaways have typically been unsuccessful," the EIU said.
Political instability in 1998 wrecked Lesotho's economy as violence and a mutiny followed disputed elections. South Africa led a Southern African Development Community (SADC) intervention force into the capital, Maseru, to re-establish law and order.
Lesotho has struggled since to rebuild its economy, with the assistance of South Africa. The country has also been in the grip of the food shortages affecting five other SADC countries.
"The government will strive to develop the economy and reduce poverty, with varying degrees of success. The IMF [International Monetary Fund] will continue to support Lesotho with its poverty reduction and growth facility, that will seek sustained economic growth and reduced annual average inflation," the EIU said.
"In order to achieve these targets and reduce poverty levels, the medium-term strategy will concentrate on increasing export-led growth, prudent fiscal management, cautious monetary policy, and legal and judicial reform," the EIU added.
Lesotho would also benefit from greater economic activity in South Africa, one of Lesotho's major export markets.
"Real growth of 3 percent in 2003 is expected in South Africa, increasing to 3.5 percent in 2004. Lesotho has forecast growth of 4.4 percent in 2003-04 and 4.8 percent in 2004-05. However, we believe that this is over-optimistic and retain our forecast of 4 percent GDP growth in 2003-04," the EIU noted.
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