Opposition leaders tear into Majoro’s budget

BONGIWE ZIHLANGU

MASERU – Minister of Finance Dr Moeketsi Majoro’s “ambitious” M21 billion budget, split between M15 billion recurrent and M6 billion capital expenditure, has stirred mixed reactions from key opposition leaders, with some praising it while others describing it as “giving me a feeling of déjà vu”.

Leaders of the opposition Democratic Congress (DC) and the Movement for Economic Change (MEC), Mathibeli Mokhothu and Selibe Mochoboroane respectively hold the view that Majoro’s budget, which promises a five percent increase in civil servants’ salaries across the board, is not viable considering its M1.8 billion deficit, further calling it “ambitious” as according to them, it contributes adversely to Lesotho’s ever bulging wage bill.

They add while the Southern African Customs Union (SACU) revenue collection has improved in 2020 compared to previous years, Majoro should have provided a sneak peek into his plans of introducing new industries, as revenue alternatives to SACU which have been predicted as likely to decline going forward.

The duo added, instead of celebrating, Lesotho should look to other revenue alternatives and prepare to wean itself off SACU while also devising strategies of utilising its factories when the US-backed Africa Growth and Opportunity Act (AGOA), which has created as estimated 35 000 textile industry jobs, expires in 2024.

The World Bank and the International Monetary Fund (IMF) have warned Lesotho over the years that the country should cut its ever-ballooning wage bill by trimming its civil service, but so far the opposite has happened, leading to the IMF issuing a statement at the conclusion of its mission in Lesotho early this month, warning government against reckless public spending and salary increases.

However, Mokhothu and Mochoboroane’s opposition counterpart, Lesotho Congress for Democracy (LCD) leader Mothetjoa Metsing begs to differ, hailing Majoro’s budget as “pro-people and intended to inject into the economy”.

Unlike his opposition peers, Metsing dismisses the notion of a ballooning wage bill as but a notion, and further asserts Lesotho should not be ashamed of benefitting from SACU and that instead of weaning itself “we should negotiate a better deal for ourselves”.

Majoro’s budget comes against the backdrop of failed promises to effect stringent austerity measures against reckless public expenditure, with the latest being his government’s failure to curb international travel for cabinet ministers and officials, which gobbled up an estimated M230 million, surpassing the initially allocated M80 million by M150 million in the 2019 to 2020 financial year.

Mokhothu has therefore accused Majoro of failing to manage corruption within Prime Minister Motsoahae Thabane’s four-party coalition government, adding that the Minister of Finance has refrained from touching on it “means they have given in to corruption”.

“What I have also noted with this budget is that the Minister is silent on the rampant corruption ravaging government ministries and key state institutions. It is obvious this government has given in, realising that they have failed to root out corruption as was their election campaign trump card,” Mokhothu says.

“While in previous budgets Majoro promised that government would exercise stringent austerity measures, he does not say what he has achieved. He is probably silent because he failed to enforce those measures.” But Mokhothu applauds the five percent salary increase across the board.

“However, we do applaud the fact that they have increased salaries across the board by five percent although that on its own is going to impact negatively on the ever-ballooning recurrent budget,” Mokhothu says.

But as is the nature of the opposition, Mokhothu quickly criticises the sum of the recurrent budget which is almost three times the allocated capital expenditure, even questioning its viability.

“A country’s annual budget is intended to invest in its people to improve their quality of life. And that we can determine by how much has been allocated towards economic development. When you look at this budget, the recurrent budget is almost three times more than the capital. That on its own endangers this country’s economy,” Mokhotu says.

“This then brings to question the sustainability of this budget, especially when you look at the deficit which is almost M2 billion. You then wonder where he is going to get funds to close the gap. I doubt this budget will sustain.”

He adds: “I don’t think it viable. We were actually very surprised. That is why it has a deficit of M2 billion. It might only be figures on the table, something that might not be realised. I think as government we should look into new ways of generating revenue to allow for our economy to grow.”

Mokhothu further notes that Lesotho has not outlined plans to create new means of generating revenue “not only with regards to SACU but AGOA as well”.

“We have not had our house in order for a long time, first failing to prepare ourselves for the retrenchment of former mineworkers. We have no plan on the way forward with SACU and at the same time AGOA expires in 2020. The question is: what’s going to happen to those factories?

“There are just so many hazards in place. The only positive I see is the five percent salary increase across the board. Otherwise I don’t see the minister taking any firm measures towards growing Lesotho’s economy,” Mokhothu says.

Mochoboroane also questions the viability of Majoro’s budget, arguing that Lesotho entered the concluding financial period with a debt of over M1 billion owed to private companies that had provided government with services but are yet to be paid. According to Mochoboroane, Majoro should have first provided a summary of how the last budget was utilised.

“Formulating the annual budget is a journey that takes you to a whole. It is therefore imperative that when you next table a budget, you take the people on a journey into how the previous year’s budget was implemented and utilised. You have an obligation to make an introduction on the performance of the last budget,” Mochoboroane says.

“But there is no such in this case and my belief is that it is not there because of the poor performance of the last budget. It is very poor. For instance, we entered the 2019/20 financial period with a debt of over M1 billion owed to private companies.

“But when you listen to the budget speech now, there is absolutely no indication that the issue of Basotho who are still owed after providing services to government will be addressed.”

He also lambasts the recurrent budget in comparison to the capital budget which he says has increased dramatically from last year’s M13 billion, further noting it is almost three times the developmental expenditure.

“When you look at the M21 billion which is the total sum of this budget, it is three times the Capital Budget with a deficit of M1.8 billion. It leaves one wondering how much the wage bill has increased, if our recurrent budget has shot from M13 billion to over M15 billion,” Mochoboroane says. “Projects that were proposed in last year’s budget continue to feature in this one,” he asks.

“For instance, the solar energy project that was supposed to be implemented at Ha Ramarothole appears in the current budget. I challenge you to go back three years, it was there in 2017, 2018, 2019 and it is here now. If you were to go to Ha Ramarothole to assess there has been any work on the ground; you will find nothing,” he adds.

Hence, Mochoborane says he doubts the 2020/21 budget will be funded and implemented as Majoro outlined, further blasting him for failing to curb reckless public spending.

“What does this say? That a budget speech is all about stringing together nice English words with not intent to implement anything. And it is sad the nation cannot even hold them accountable for failure to fulfil their promises. The discouraging manner in which the previous year’s budget was implemented tells you that this one faces a similar fate,” Mochoroane says.

“The 2019/20 budget and the ones before it promised to implement austerity measures to curb excessive public spending, but you don’t hear the minister of finance touching on it because he failed to realise any success. When you look at the last budget, government was allocated M80 million for international travel, only for it to shoot to M230 million. This then means it would have been difficult for him to explain how that came to be.”

Mochoborane further alleges the 2020/21 budget for old age pensions, which promises an M50 increase, was compiled using false statistics thus exaggerating the actual amount that is supposed to be channelled towards the grants.

“Look at the Old-Age pensions. It is well that they have been given an M50 increment but the statistics used to make those estimates includes ghost beneficiaries. No one can take me up on that because I have been on the ground.

“For three days in December, we picked out about 300 ghosts in the old-age payroll, with civil servants later picking out about 1 400 ghosts. If you were to translate that in real terms, you will establish that the country has lost about M15 to 18 million because the old-age payroll is compiled based on a false picture,” he says.

The MEC leader also has a gripe with Lesotho relying on SACU and AGOA as major revenue sources, adding there must be new, sustainable means devised by Majoro, who in all his three previous budgets complained about declining SACU receipts.

“While it has been indicated that SACU collections have improved this year, it is not sustainable. IMF has warned that the revenue is going to decline going forward. The last three budgets addressed the declining revenue and the future of AGOA in Lesotho, but there are no clear strategies how government hopes to close that gap,” Mochoboroane says.

“It is therefore wrong for government to assume that applying more taxes on tobacco and alcohol will generate revenue. It is only going to create chaos because government has not conducted any feasibility study, especially when there is tobacco and alcohol being smuggled into the country. “Now people are going to lean more towards smuggling tobacco and alcohol.” He further asserts that such increases meant the burden is going to fall on consumers.

“When you increase the oil levy, is it because you have had consultations with taxi operators, car owners and users of such services? It says passengers are going to bear the brunt because operators are going to increase transport fares and Basotho are going to suffer the most,” he says. But Metsing sings a different tune from his opposition colleagues, praising the budget for being pro-people and aimed at “injecting into the economy”.

“I see a budget that is pro people, and which is intended to inject into the economy of the country. SACU has brought us a lot of money this year, and that on its own is to be celebrated,” Metsing says.

“We are also glad that there is a five percent increase across the board, although it doesn’t change the status quo much as people remain worse off due to failure to increase their salaries last year.”

However, he expresses concern on inflation which is estimated at 4.8 percent, saying it means that “there is little disposable income coming to the people”. “That is the part that doesn’t sit well with me,” Metsing says.

Quizzed on the recurrent budget versus the capital coupled with IMF and World Bank warning to guard against a ballooning wage bill, Metsing says it is impossible to trim jobs in order to cut the wage bill.

“As far as I am concerned, there are situations that we need to make peace with. You cannot trim Lesotho’s wage bill by cutting down the number of civil servants as that simply translates into the increase in poverty,” Metsing says.

“What I need is for Lesotho to make deliberate efforts to grow the economy. I’m saying this because the ballooning wage bill is just not in the abstract. What is it big against? Probably the rate at which Lesotho’s economy is growing. If you like, you to compare us to countries with bigger wage bills whose civil servants earn much more than we do but whose economies are much bigger.”

He adds: “It all depends on the rate at which we grow our economy and Lesotho’s political climate has a bearing on how things have turned out. It makes it difficult to attract investors. There are these political tensions all the time, which some people take for mere gymnastics. At the end of the day, Lesotho bears the brunt of the damage.”

Regarding the introduction of new industries to close the gap likely to be left by declining SACU revenues, Metsing proposes instead that Lesotho should seek a better deal with South Africa, saying the country’s economic fortunes are tied to its wealthier neighbour.

“My stance has always been that we need improved cooperation with South Africa if we are to prosper economically as a country. There have been views that we should be that country’s tenth province while those to the contrary advocate the removal of borders to allow for free movement,” Metsing says.

“I hundred percent, agree with the fact that we should remove the borders while still very much preserving Lesotho’s sovereignty. That would mean free movement of persons and improved prospects of Basotho securing employment. It would also enable companies registered in Lesotho operate freely in that country. Like in the EU region, there would be free movement of persons, capital, commodities and services.”

“If we were to engage South Africa on this, we could wean ourselves off SACU, yes. But I am for negotiating a better deal that respects our sovereignty like the EU. I am actually a little bit worried that South Africa is not assisting to facilitate such deals. The sooner we negotiate that which we can use to unlock our potential as Lesotho, the better.”

The LCD leader also reminisces on how South African President Cyril Ramaphosa once advised former Prime Minister Pakalitha Mosisili to “come up with a dispensation that would be mutually beneficial to both countries.”

“We need that dispensation with South Africa because it is our only neighbour. If the Europeans can do it, why can’t we? I think we need to be negotiating a number of things. And, I don’t think weaning ourselves off SACU should be a priority but rather how we can negotiate a better deal,” Metsing says.

“We shouldn’t be ashamed of the SACU revenue, we are not an island. We are part of this community and if South Africa doesn’t realize that now, they will one day. There will be a time when these other SADC countries around South Africa will intensify their cause and remind it that those are artificial borders.”

Meanwhile, Government Spokesperson and Minister of Communications Thesele ’Maseribane, has hailed the budget as inclusive and considerate of all sectors of society, dismissing concerns that the budget merely mimics previous budgets.

“There is a huge difference between this budget and the previous one. My understanding is that this budget prioritizes infrastructure in the form of telecommunications networks, water and electricity. In Lesotho we have the challenge of ministries that work in silos. We should try to work in such way that when we take services to a particular area, we do it at the same time,” ‘Maseribane says.

“We are looking at the highlands from a telecommunications perspective, that the signal there is either poor or non-existent. As such, if we are planning to install 48 BTS this year, preference should be given the highlands, just as we are taking our fibre there to ensure that people are not left behind.”

He points to the fact that this budget focuses on good nutrition amidst persistent reports of stunting in Lesotho’s children under the age of five, perpetuated by poverty and hunger.

“It is a good budget, especially if one can recall that His Majesty King Letsie III is the champion of nutrition in Africa. If we don’t step up, then we will be failing in the mandate that Africa has entrusted us with.” ’Maseribane again notes that Majoro also placed emphasis on political stability which is a prerequisite to a thriving economy.

“We shouldn’t give money to the Lesotho National Development Corporation without considering that there are Basotho locals who can as easily build factories for us. This budget addresses major challenges that Basotho are grappling with such as poverty, lack of infrastructure, poor health, education, etc.”

He is quick to come to government’s defence against accusations that it failed to implement the previous year’s budget as had been presented, saying “estimates don’t mean cash”.

“Estimates don’t mean that there is cash. It is about collecting all we can, then saying to Basotho, this is what we have. We have the Lesotho Revenue Authority as the tax collectors, when we increase a bit of tax here, a bit there, they have more to pour into the bag. Another serious challenge is the conflict between China and the United States, which has been brewing. It has affected our revenue as we could not relax,” ’Maseribane says.