SACU revenues boost budget

MASERU – IMPROVED revenues from the Southern Africa Customs Union (SACU) this year will allow Finance Minister Moeketsi Majoro some wiggle room to give government employees a five percent bump on their salaries.
That is welcome news for civil servants who were left smarting with anger last year when Majoro said the government could not afford to increase their salaries because it was in a financial squeeze. Majoro said year on year inflation is expected to remain steady at around 4.8 percent.

That means the salary adjustment for government employees is slightly over the expected inflation. That, however, doesn’t mean that government workers are much better off.

The increase is on last year’s salaries which were not adjusted and whose value has been gnawed by inflation. The minister said the government will increase the monthly tax credit from M800 to M840 to lowly paid workers likely to be affected by the tax adjustment.

The tax bracket will be adjusted from M5 090 to M5 350 for the same reason. Majoro also seemed wary of jerking up the government salaries which he said were already gobbling much of the M21.9 billion budget.

The International Monetary Fund (IMF) has already warned that Lesotho’s wage bill was spiralling out of control. Majoro has previously said the same. In sum M15.7 billion of the budget will go to recurrent expenditure (running costs) and M6.3 billion will be used for capital projects.

Majoro said the budget will be funded by domestic taxes, SACU revenues and grants. Domestic taxes like Value Added Tax, employee tax and duties will generate M7.9 billion.
Non tax revenue will contribute M2.1 billion while grants will add M1.1 billion.

The biggest cheque will come from SACU at M8.9 billion. There will be a M1.8 billion shortfall that government should ideally make up with borrowings. The numbers show a general increase on SACU and tax revenues this year. SACU revenues are up M2.37 billion on last year.
VAT is expected to increase by 7.2 percent on the back of the additional three percent tax on telecommunications. That is bad news for customers because it is likely to make mobile network services more expensive.

The improved numbers allowed the revenues to increase to 53.5 percent of the total size of the economy. Grants from international partners and donors are expected to drop by about M100 million.

But that is likely to be supplemented by strong tax and SACU revenues.
Majoro proposes to use part of the substantially improved purse to invest in job creation, infrastructure, health, education and other social interventions. The Old Age pension, one of the government’s biggest and most popular social interventions, will be increased from M750 to M800.

Brick and mortar

• Government needs M12 billion to repair the road network
• Road construction tenders to be bundled with maintenance contracts so companies feel the pain of their shoddy work
• Local government Minister repairing and upgrading 46.7 km of roads in Maputsoe, Mohalalitoe, Tšosane and Sekamaneng
• 200 people employed on construction of Marakabei-Monontsa and Mpiti-Sehlabathebe roads
• World Bank funded construction of 35 footbridges
• Toll fees up M5
• Two solar power stations coming this year
• Three additional classrooms at 23 primary schools and 22 secondary schools
• M339 million for Region 5 Games in December

Staff Reporter