June 15, 2005

Free trade, G8 deal of little help, says Minister

For the deeply impoverished mountain kingdom of Lesotho neither the G8 debt relief deal nor the lifting of barriers to free trade offers much comfort, Finance Minister Timothy Thahane has said. The Multifibre Agreement, a global quota agreement that effectively capped production by Asian producers, has led to a flurry of textile factory closures as Lesotho, a landlocked country surrounded by South Africa, failed to compete with booming Chinese production, Thahane stated. "It exposed us to competition from China, India and Bangladesh. Now, Lesotho's textile exports have to compete with more established and better producers," Thahane further explained. According to him, one in five of the 50-55.000 textile industry jobs had been affected as mainly smaller textile firms often owned by Chinese and Taiwanese firms closed down or cut back jobs. Hence, Lesotho was pushing for preferential trade deals with Western buyers. In industrial areas of the capital Maseru, factories and the nearby stalls that once sold their workers food at lunchtime stand empty, while former employees wait outside the remaining firms hoping for work, Thahane stated
He also articulated that Lesotho had to diversify its economy, but for that it needed outside help. According to Lesotho media, unemployment was 50 percent but there were no official data on the subject. Analysts see mining, tourism and irrigation-fed agriculture as options.
The Minister said that freeing Lesotho from its debt - 85 percent of which amounts to $600 million owed to international lenders like the International Monetary Fund and World Bank, with the remaining 15 percent bilateral debt mainly to France and South Africa - would allow it to spend more on reducing poverty. But Lesotho was not one of the 18 heavily indebted poor countries named last week by the G8 for debt forgiveness. Thahane said he expected the country to be included in future deals, but said one of the reasons Lesotho was not classed as a HIPC country was that it had never defaulted on its debt. "We have never defaulted on our debt. It is important that those who have paid their debts well, who run their mega-finances well, should be rewarded with debt forgiveness." (Rts)


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