IMF issues final poverty reduction loan

Lesotho's poverty alleviation programmes have been given a vote of confidence by the International Monetary Fund (IMF), although the country continues to struggle with an ongoing food crisis. The World Food Programme (WFP) estimates that around 600,000 people will require food aid in the tiny mountain kingdom, where people's ability to withstand shocks has been diminished by deepening poverty. The agency warned earlier that poor winter harvests and the late onset of planting-season rains could only increase food aid needs in the months ahead. Last Friday the IMF announced that it had released the last tranche of a US $36 million Poverty Reduction and Growth Facility (PRGF) arrangement. The PRGF is the IMF's concessional lending facility for low-income countries. Progress on the development of Lesotho's full Poverty Reduction Strategy Paper (PRSP), a blueprint for tackling poverty in the country, had been satisfactory and had provided a "sound basis for continued access to IMF concessional assistance", the IMF said in a statement. "Lesotho has made commendable progress under the current PRGF-supported programme. Economic growth has been above the average for sub-Saharan Africa, macroeconomic stability has been largely achieved, and the public debt has declined. Macroeconomic performance has remained strong, despite the continuing drought and an unfavourable external environment," IMF deputy managing director and acting chairman, Takatoshi Kato, was quoted as saying. The textile and clothing industry continued to be the key engine of growth, but the IMF noted that "drought has worsened the humanitarian situation and a substantial part of the population might need food assistance". "The authorities remain committed to pursue sound macroeconomic policies and to accelerate the implementation of reforms. This will be important to meet the substantial challenges Lesotho faces over the medium and long term in its quest to raise economic growth, reduce poverty and improve social conditions," Kato said. These challenges included increasing global competition following the phasing out of export quotas on textiles and clothing, a decline in miners' remittances from South Africa, the fragile food situation, and the HIV/AIDS pandemic. Particular emphasis needed to be placed on maintaining fiscal discipline, Kato added.