September 10, 2004

IMF: Economy grows as crisis worsens

Since February, Lesotho is in a state of emergency due to three years of drought, hunger and a dramatic increase in HIV/AIDS cases. On the other side, Lesotho is experiencing an economic growth well above the African average. For several years, the deepening of the country's humanitarian crisis has been paralleled by a strong GDP growth. The latest review of Lesotho's economy by the International Monetary Fund (IMF) is therefore in stark contrast to the picture normally painted of the small Southern African kingdom. "Economic growth has been above the average for sub-Saharan Africa, macroeconomic stability has been largely achieved, and the public debt has declined," the IMF review's basic conclusion is. In fact, the IMF says, "Lesotho has made commendable progress" during the last year. The extraordinary economic growth, whose figure the Fund does not state, was mostly driven by the textile and clothing industry, which "continues to be the key source for economic growth." Therefore, as the report notices, Lesotho was making progress in reaching its poverty reduction aims.
However, the Fund's review also reveals there are severe problems in the Kingdom of Lesotho.
Economic growth had come "despite the continuing drought and an unfavourable external environment." Further, the drought had indeed "worsened the humanitarian situation and a substantial part of the population might need food assistance in 2004/05." Between the lines, the IMF review thus admits that poverty might actually have spread despite of economic growth. (afrol News)


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