Lesotho to focus on alternative revenue collection
2010-02-15 www.brunei.fm
Resources > By Topic > OTHER TRADE TOPICS > Trade and Development
Lesotho will be pinning its hopes on the promising market prices for the next year while looking at alternative revenue creation to support the country’s spending.
Minister of Finance and Development Planning, Tim Thahane, told Parliament Friday that government will have to continue to guard on its non-capital spending and increase its investments on human development.
“Lesotho will be well-advised to anchor its long-term expenditure planning on the long term growth of domestic revenue. SACU revenues should only be used to finance investment rather than expansion of recurrent budget, in particular wages and salaries. Most countries observe a similar principle,” said Mr Thahane.
He noted that SACU revenue had increased from M1,422 million in 2003/4 to M4,900 million in 2008/9 and 2009/10, respectively, adding that in 2010/11 it is projected to decline by 60 percent to M2,162 million and to M1,695 million in 2011/12 before recovering to M3,725 million in 2012/13.
He said the fluctuation is due to a number of reasons, mentioning amongst others, that Customs Duties dominate the Revenue Pool and it is difficult to project accurately what the imports of the member states of SACU are likely to be in any one year since they depend on policy developments in member and non-member states.
“The level of imports affects the customs duties that go into the Revenue Pool, hence the members’ respective shares. Secondly, global trade tariffs have shown a declining trend over the years and may decline much more sharply after the present Round of WTO negotiations. This means the size of the pool will also be expected to decline, resulting in lower shares for members. Third, with an increasing trend towards formation of larger free trade areas, the revenue from customs duties will become less and less,” he explained further.
Looking at the Government Recurrent Expenditures from 2003/04 to 2009/10, he said one observes that they have increased by M4,878 million while domestic tax and non-tax revenues increased by only M2,273 million, and thus SACU revenues financed the extra two billion increase in recurrent costs.
He also mentioned that with the changing trends, the SACU Council of Ministers have recently reaffirmed the commitment of their countries to the objectives of SACU and agreed to work towards making SACU an anchor of the SADC Customs Union.
He added that the ministers further agreed to set a taskforce of senior officials to review how SACU can be modernised and made to contribute to the harmonisation of industrialisation and competition policies.
He also said during 2009, exports, especially of garments, suffered the brunt of a collapse in demand in the United States, which still remains Lesotho’s largest textile market, adding that exports to the US declined by over 30 percent during the two years between 2007 and 2009 and by about 20 percent between December 2008 and December 2009. He also said the market for diamonds has equally been battered by a decline in global prices of more than 2009/10, Government had budgeted revenue of M9,942 million inclusive of grants of M1,079 million, but said however, the expected outturn amounted to M9,379 million, which is M563 million or 6 percent lower than budget.
Mr Thahane today presented budget estimates totaling M10,476 billion, of which government will be able to finance just over sixty percent. He said the rest of the budget will be financed through grants and loans from development partners.
Published in: Resources > By Topic > OTHER TRADE TOPICS > Trade and Development