Lesotho’s 2025/26 Budget silent on Trump’s aid freeze, raising economic concerns
RETHABILE MOHONO
MASERU – The proposed 2025/26 budget failed to address US president, Donald Trump’s decision to impose a 90-day suspension on US foreign aid, a move that could have significant financial consequences for Lesotho’s health sector. With key sectors such as healthcare and horticulture relying on USAID funding, experts warn that the freeze could create a substantial funding gap, potentially disrupting ongoing development projects and essential services.
Despite these concerns, the government has yet to present a clear strategy for addressing the potential shortfall or mitigating its effects on critical sectors. This silence has raised alarms among stakeholders, including politicians and economic analysts, who fear the absence of a contingency plan could lead to economic instability.
The Revenue Services Lesotho (RSL), in collaboration with Nedbank Lesotho, hosted a prestigious Post-Budget Speech Gala Dinner, providing a platform for stakeholders to analyze, reflect, and collaborate on economic growth strategies following the national budget presentation. The event brought together guests from both the public and private sectors to discuss the fiscal priorities outlined by Minister of Finance and Development Planning, Dr Retšelisitsoe Matlanyane.
Dr Matlanyane underscored the urgency of addressing youth unemployment, citing the 2024 Labour Force Survey. “Among the 760 230 young Basotho aged 15 to 35, approximately 145 087 are currently unemployed. This figure is striking; nearly 39 percent of our youth actively looking for work are unable to secure a job,” she said.
She emphasized that these statistics represent more than just numbers – they reflect deferred dreams and unfulfilled potential.
However, she noted that opportunities exist in the informal sector, which currently employs 461 873 people, compared to 87 849 in the formal sector. Dr Matlanyane urged the private sector to play a leading role in expanding job creation, particularly in emerging economic sectors.
Economic experts criticized the government’s lack of response, noting that the public expected budget estimates to address the issue. Highlighting those expectations were that the government would clarify its strategy for mitigating the funding shortfall and preventing adverse effects on key sectors such as healthcare and agriculture.
Analysts mention that the budget estimates might have been finalized before the aid freeze was announced on January 20. However, they hoped the Minister of Finance should have acknowledged the potential impact and outlined a plan during her speech.
Analysts argued that addressing the aid freeze in the budget speech would have demonstrated the government’s commitment to managing the economic challenges it poses. Instead, the government’s silence raises concern about its readiness to handle the situation.
The reduction in the Ministry of Health’s budget, which has dropped from M3.4 billion in the 2024/25 fiscal year to M3.1 billion for 2025/26 has also brought mixed emotions with many citizens saying that the Ministry of Health is vital to ensuring the well-being of citizens, thus a reduction of M0.3 billion may seem minor, but it could significantly impact the ministry’s ability to provide quality healthcare, especially if the aid freeze is not adequately addressed. Meanwhile, the agriculture sector, which received an estimated M1.3 billion – unchanged from the previous budget – is regarded as a key pillar of the national economy.
When presenting the budget under the theme ‘Building Strategies for Inclusive Growth,’ Minister of Finance and Development Planning Dr Retšelisitsoe Matlanyane maintained that the allocated funds would support the Ministry of Health in delivering essential services.
“As we continue to grapple with the burden of both communicable and non-communicable diseases, we are committed to taking bold steps to enhance health services and innovation across the nation,” Matlanyane said. She highlighted the adoption of Primary Health Care (PHC) as a key strategy to ensure accessible, community-driven, and comprehensive healthcare services.
“This approach will help reduce the incidence of diseases such as tuberculosis (TB), HIV/Aids, and chronic non-communicable conditions like hypertension and diabetes, while also strengthening our healthcare infrastructure.” Matlanyane also underscored the government’s commitment to community engagement and empowerment as critical components of improving health outcomes. She noted that integrating health services with local community systems and supporting healthcare workers would enhance health security, biosecurity, and patient safety.
“In our fight against tuberculosis, we are employing innovative tools such as digital X-ray technology with Artificial Intelligence (AI) to improve diagnostic accuracy and advance our healthcare sector,” she said. She added that the government remains committed to tackling HIV/Aids through comprehensive testing, treatment, and prevention initiatives to ensure no one is left behind.
However, opposition figures remain critical. Member of Parliament and leader of the Mpulule Political Summit, Remaketse Sehlabaka, condemned the government’s handling of both the aid freeze and the reduced health budget. “The budget estimates fail to address this crucial issue, raising questions about the government’s competence and commitment to protecting economic stability. These are not matters that can be ignored,” Sehlabaka said.
She further warned that every day without a clear plan from the government increases uncertainty for citizens and the economy.
However, she noted that since the budget estimates are still subject to review and debate in parliamentary committees, legislators would use the opportunity to push for clarity on the government’s approach to handling the aid freeze and the reduced health budget.
Apart from that, the budget also failed to address old-age pensions, which did not receive an increase this year.
During the Post-Budget Speech Gala Dinner, Minister of Finance and Development Planning Dr Matlanyane defended the government’s decision not to increase pensions. She explained that pensioners had received increases in the past two years, while grants for orphans, vulnerable children, and people with disabilities had remained unchanged.
“When we increased the grants for elderly people in previous years, those with disabilities did not complain,” she said. “However, these vulnerable groups, especially disabled individuals and orphans, face severe conditions.”
She highlighted cerebral palsy as one of the most prevalent and devastating conditions in the country, noting that children affected by it require full-time care for their entire lives. “These children need diapers and various other necessities, yet they receive only M250 per month. Meanwhile, elderly people receive M950 per month and still complain when we allocate just M50 more to those with disabilities and other vulnerable groups,” she stated. Matlanyane urged the public to be more understanding of the government’s efforts to balance social support.
“As a community, we need to recognize why certain decisions are made. Consider the gap between M250 and M950 and the conditions in which these groups live before criticizing the adjustments,” she added. The Post-Budget Speech Gala Dinner served as a reminder that Lesotho’s economic transformation requires a shared commitment from all stakeholders.
With an emphasis on youth employment, innovation, and strategic public-private partnerships, the event reinforced the collective responsibility of shaping a prosperous future for Lesotho.
