LESOTHO MARCH 2008 ECONOMIC ROUND-UP: ELECTRICITY, SADC, AND

UNCLAS MASERU 000095 SIPDIS SIPDIS DEPT ALSO FOR AF/EPS, AF/S E.O. 12958: N/A TAGS: ECIN ECON ETRD PGOV PHUM LT SUBJECT: LESOTHO MARCH 2008 ECONOMIC ROUND-UP: ELECTRICITY, SADC, AND THE IMF ¶1. In this edition: -- Electricity Rates Hiked to Curb Demand -- SADC Labor Group to Meet in Maseru -- IMF Executive Visits Lesotho -- "Towards a Poverty Free SADC" -------------- Electricity Rates Hiked to Curb Demand -------------- ¶2. As of April 1, the Lesotho Electricity Authority (LEA) will implement new rates designed to curb electricity consumption in the nation. The LEA will raise the price of electricity for residential customers and street lighting by 12%, and the rates for industrial users by 8.7%. The rates for schools and churches will be cut by 3%. Lesotho's Minister of Natural Resources recently announced the government's intention to reduce power demand by 12% in response to the regional power shortage. This pricing move particularly targets domestic demand, which has grown quickly in recent years and, according to the government, threatens the supply/demand balance of the nation's electrical grid. -------------- SADC Labor Group to Meet in Maseru -------------- ¶3. The Government of Lesotho, through the Ministry of Labor and Employment, will host a SADC Employment and Labor (SADCELS) meeting on April 3. SADCELS deals with regional labor issues such as improving productivity, encouraging social dialogue, combating child labor, and alleviating poverty. The official purpose of the meeting is to review the work of various SADCELS technical subcommittees. The organization will review documents including a code of conduct on child labor, a charter on fundamental principles at work, a code of conduct on chemical safety, an action plan regarding HIV/AIDS in the workplace, and submissions on social security. -------------- IMF Board Members Visit Lesotho -------------- ¶4. An IMF Executive Board delegation, led by Executive Director for the Russian Federation Mr. Aleksei Mozhin, visited Lesotho during the first week of March 2008. According to Mozhin, such visits are regularly scheduled by the IMF Executive to keep abreast of member countries' activities. During their visit, the delegation of five Executive Directors met with Lesotho's cabinet budget committees, development partners, private sector representatives, and financial sector institutions. ¶5. Mozhin commended Lesotho for its strong macroeconomic management, resulting in substantial reductions in the level of its public debt. However, Mozhin asserted that the nation faces a number of challenges, including: 1) Lesotho's heavy dependence on SACU customs revenues; 2) the threat to government revenues posed by the global reduction in trade tariffs; 3) the vulnerability of Lesotho's textile industry to external shocks; 4) the narrow, non-diversified nature of Lesotho's export and main growth sectors; and 5) the underdeveloped nature of the financial sector which must foster domestic savings and investment. -------------- "Towards a Poverty-Free SADC" -------------- ¶6. On March 17, the Ministry of Finance and Development Planning held a National Stakeholder consultation workshop entitled "Towards a Poverty-Free SADC" in order to assess Lesotho's national and regional poverty reduction programs with a goal of submitting the nation's Poverty Reduction Strategy (PRS) to the SADC Secretariat. ¶7. The Finance Ministry's Chief Executive for Economic Policy, Mrs. Motena Tsolo, presented a broad overview of the country's first PRS, stating critically that the strategy was not implemented in a systematic manner and ignored most areas of government spending. She mentioned that although the first PRS (2004-2007) brought marginal improvement in some measures of poverty reduction, poverty is actually deepening as measured by health and infrastructure indicators. She then highlighted the stakeholder coordination which would precede the implementation of Lesotho's next PRS. According to Mrs. Tsolo, the next generation PRS will better address private sector-led growth and infrastructure development, including manufacturing sector infrastructure, to ensure that higher value added production is possible in Lesotho. NOLAN