IMF grants concessional loan

The International Monetary Fund (IMF) has approved a US $5.2 million disbursement to impoverished Lesotho after a review of the country's economic performance. The disbursement was granted under the IMF's Poverty Reduction and Growth Facility (PRGF) - a concessional loan facility for low-income countries - and brings the total amount drawn under the arrangement to US $31.1 million, the IMF said in a statement. "Lesotho has made commendable progress under the PRGF-supported programme. Economic growth has remained satisfactory, benefiting from strong textiles exports to the United States under the U.S. African Growth Opportunity Act (AGOA). Consumer price inflation has declined, in line with developments in South Africa. Nevertheless, Lesotho faces many serious challenges in the years ahead, including falling agricultural productivity, the potential loss of trade preferences, and the high incidence of HIV/AIDS," Shigemitsu Sugisaki, deputy managing director and acting IMF chair, was quoted as saying. More than 600,000 people are in need of food assistance after drought-related crop failures and the government is expected to declare a state of emergency. The economy has been further undermined by the retrenchment of mine workers from neighbouring South Africa. Sugisaki said the government was "cutting non-priority expenditures" and "recent initiatives include restarting the auditing of public accounts, improving forecasting, budgeting, and accounting within the public sector, and developing institutions to improve governance". However, "they need to deepen reforms to foster competition in the financial system, strengthen property rights and the judiciary, and improve credit for small and medium-sized businesses," he concluded.