Inflation rate up to 5.6%

Inflation rate up to 5.6%

MASERU -THE Central Bank of Lesotho’s Monetary Policy Committee yesterday reduced the net international reserves (NIR) target floor from US$765 million to US$755 million.
The committee also decided to maintain the CBL rate at 6.75 percent per annum.
“The Committee will continue to monitor global developments and their likely impact on domestic macroeconomic conditions especially the CBL NIR with the aim of taking corrective action when needed,” said Dr Rets’elisitsoe Matlanyane while delivering a statement of the Monetary Policy Committee in Maseru yesterday..

She said Lesotho’s inflation rate, measured by year-on-year percentage change in the consumer price index, jumped to 5.6 percent in April from 5.2 percent the previous month.
“The major contributors to the observed acceleration included food and non-alcoholic beverages, clothing and footwear, housing, water, electricity and gas and transport,” she said.
Dr Matlanyane said Lesotho’s economic activity increased marginally in March this year compared to the previous month.
Economic activity indicated that output grew by 1.2 percent in March compared to 1.1 percent in February, said
Economic activity was mainly supported by domestic demand, Dr Matlanyane said.
Regarding labour market developments, Dr Matlanyane said employment by the Lesotho National Development (LNDC)-assisted firms declined further by 1.2 percent on an annual basis in the first quarter of this year compared with a fall of 2.2 percent in the fourth quarter of 2018.

She said the number of Basotho migrant workers in the South African mining industry continued to fall.
Dr Matlanyane said money supply as measured by M2, fell by 2.0 percent in the first quarter of 2019 in contrast to an increase of 2.2 percent in the fourth quarter of 2018.
The decrease was attributed to a decline in net foreign assets, which outweighed the growth in domestic claims, she said.
She said the external sector position improved in the first quarter boosted by surpluses in both the current and the capital and financial accounts.
Consequently, she said, gross international reserves rose to 4.5 months of import cover from 4.2 months observed in the fourth quarter.

The Central Bank announced that on the fiscal front, a deficit of 7.2 percent of Gross Domestic Product (GDP) was recorded in the first quarter of 2019.
The apex bank said the deficit was consistent with the end-of-fiscal-year budget operations where spending increases were not matched by revenue collection.
The bank said Lesotho’s fixed exchange rate system under the Common Monetary Area of Southern Africa (CMA) requires a healthy fiscal position to support maintenance of the exchange rate parity.
Therefore, the MPC decided to reduce the net international reserves (NIR) target floor from US$763 million to US$755 million.

Refiloe Mpobole

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