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IMF APPROVES LOAN FOR LESOTHO

 WASHINGTON, Aug. 2 /PRNewswire/ -- The International Monetary Fund (IMF) has approved a loan equivalent to Special Drawing Rights (SDR) 7.55 million (about US$10.5 million) under the enhanced structural adjustment facility (ESAF)(A) for Lesotho in support of its economic and financial program for 1993/94. Of the loan total, the equivalent of SDR 3.775 million (about US$5.25 million) is available immediately for disbursement. This is the third annual loan under the three-year ESAF arrangement for Lesotho equivalent to SDR 18.12 million (about US$25 million) approved on May 22, 1991. Four semi-annual loans equivalent to SDR 10.57 million (about US$15 million) have already been disbursed under the first and second annual ESAF-supported programs.
 During 1992/93, Lesotho achieved its major objectives under the ESAF program. Real GDP grew by 2.4 percent, in spite of the drought that affected southern Africa, and the external sector was strengthened, allowing for a further buildup of international reserves. However, the annual rate of inflation remained high, at 17 percent, reflecting imported inflation from South Africa and drought-induced food price increases. Fiscal performance under the program was strong, and the budget balance swung from large deficits in earlier years to a surplus of 2.1 percent of GNP in 1992/93.
 Lesotho's economic program for 1993/94 aims at achieving real GDP growth of 7 percent, reducing the rate of inflation, and building up further international reserves. To these ends, fiscal policy will aim at raising the overall budget surplus to 2.3 percent of GNP, and monetary policy will seek to make resource mobilization and allocation more efficient, as well as to increase credit to the rest of the economy, mainly the private sector.
 In the area of structural reform, the government will continue implementing agricultural reforms to increase the production of basic foodstuffs by improving land use and range management. The authorities will also begin implementing a parastatal enterprise reform program, including privatization, and commercialization. Six parastatal companies will be dealt with in 1993/94 under this reform program.
 In the social field, outlays for education and health will continue to rise in real terms, and additional resources will be allocated for vocational and job training. Given the success in 1992/93 of the programs social safety net to mitigate the adverse impact of adjustment on the most vulnerable groups, the resources allocated to the social safety net will be increased under the 1993/94 program.
 Lesotho joined the IMF on July 25, 1968. Its quota(B) is SDR 23.90 million (about US$33 million), and its outstanding financial obligations to the IMF currently total the equivalent of SDR 10.5 million (about US$15 million).
 (A) The ESAF is a concessional IMF lending window for assisting low- income member countries that are undertaking economic reform programs to strengthen their balance of payments and improve their growth prospects. Loans under the ESAF carry an interest rate of 0.5 percent and are repayable over 10 years, with a grace period of 5-1/2 years.
 (B) A member's quota in the IMF determines, in particular, the amount of its subscription, its voting weight, its access to IMF financing, and its allocation of SDRs.
 -0- 8/2/93
 /CONTACT: International Monetary Fund, External Relations Department, 202-623-7100/


CO: International Monetary Fund ST: District of Columbia IN: FIN SU:

IH-DC -- DC025 -- 8551 08/02/93 17:04 EDT
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Publication:PR Newswire
Date:Aug 2, 1993
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