CIVID-19 expected to weaken economy
Dr Retšelisitsoe Matlanyane, CBL Governor
‘MAKERESEMESE LETUKA
MASERU – Lesotho’s fiscal position and economic outlook is under pressure and expected to remain fragile in the short to medium term as government responds to the current COVID-19 pandemic outbreak.
The Monetary Committee (MPC) of the Central Bank of Lesotho (CBL) considered international, regional and domestic economic developments and financial markets’ conditions in light of the unfolding global socio-economic crisis triggered by the outbreak of the pandemic in its outlook.
The global spread of the COVID-19 has raised concern across the world and heightened economic uncertainly, and the uncertainty it has brought about by the outbreak has put global economic activity at risk, according to the CBL.
According to the organisation for the Economic Cooperation and Development (OECD), global economic growth could reached 1.5 percent in 2020, compared to an earlier projection of 2.4 percent, as firms suspended their activities and workers stay at home to contain the spread of the virus. This rate of growth would be the lowest since 2009.
“In the banking sector, weak economic activity is likely to increase credit risk as borrowers struggle to meet loan repayment schedules, and results in high non performing loan. While this would ordinarily lead to tighter financing conditions, prevailing circumstances warrant the opposite,” said Dr Retšelisitsoe Matlanyane, CBL Governor.
