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Viewing cable 08MASERU95, LESOTHO MARCH 2008 ECONOMIC ROUND-UP: ELECTRICITY, SADC, AND

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Reference ID Created Released Classification Origin
08MASERU95 2008-04-02 14:36 2011-08-26 00:00 UNCLASSIFIED Embassy Maseru
VZCZCXRO1262
RR RUEHBZ RUEHDU RUEHJO RUEHRN
DE RUEHMR #0095 0931436
ZNR UUUUU ZZH
R 021436Z APR 08
FM AMEMBASSY MASERU
TO RUCNSAD/SADC COLLECTIVE
INFO RUEHMR/AMEMBASSY MASERU 4040
UNCLAS MASERU 000095 
 
SIPDIS 
 
SIPDIS 
 
DEPT ALSO FOR AF/EPS, AF/S 
 
E.O. 12958: N/A 
TAGS: ECIN ECON ETRD PGOV PHUM LT
SUBJECT: LESOTHO MARCH 2008 ECONOMIC ROUND-UP: ELECTRICITY, SADC, AND 
THE IMF 
 
1.  In this edition: 
 
-- Electricity Rates Hiked to Curb Demand 
-- SADC Labor Group to Meet in Maseru 
-- IMF Executive Visits Lesotho 
-- "Towards a Poverty Free SADC" 
 
-------------------------------------- 
Electricity Rates Hiked to Curb Demand 
-------------------------------------- 
 
2.  As of April 1, the Lesotho Electricity Authority (LEA) will 
implement new rates designed to curb electricity consumption in 
the nation.  The LEA will raise the price of electricity for 
residential customers and street lighting by 12%, and the rates 
for industrial users by 8.7%.  The rates for schools and 
churches will be cut by 3%.  Lesotho's Minister of Natural 
Resources recently announced the government's intention to 
reduce power demand by 12% in response to the regional power 
shortage.  This pricing move particularly targets domestic 
demand, which has grown quickly in recent years and, according 
to the government, threatens the supply/demand balance of the 
nation's electrical grid. 
 
---------------------------------- 
SADC Labor Group to Meet in Maseru 
---------------------------------- 
 
3.  The Government of Lesotho, through the Ministry of Labor and 
Employment, will host a SADC Employment and Labor (SADCELS) 
meeting on April 3.  SADCELS deals with regional labor issues 
such as improving productivity, encouraging social dialogue, 
combating child labor, and alleviating poverty.  The official 
purpose of the meeting is to review the work of various SADCELS 
technical subcommittees.  The organization will review documents 
including a code of conduct on child labor, a charter on 
fundamental principles at work, a code of conduct on chemical 
safety, an action plan regarding HIV/AIDS in the workplace, and 
submissions on social security. 
 
------------------------------- 
IMF Board Members Visit Lesotho 
------------------------------- 
 
4.  An IMF Executive Board delegation, led by Executive Director 
for the Russian Federation Mr. Aleksei Mozhin, visited Lesotho 
during the first week of March 2008.  According to Mozhin, such 
visits are regularly scheduled by the IMF Executive to keep 
abreast of member countries' activities.  During their visit, 
the delegation of five Executive Directors met with Lesotho's 
cabinet budget committees, development partners, private sector 
representatives, and financial sector institutions. 
 
5.  Mozhin commended Lesotho for its strong macroeconomic 
management, resulting in substantial reductions in the level of 
its public debt.  However, Mozhin asserted that the nation faces 
a number of challenges, including: 1) Lesotho's heavy dependence 
on SACU customs revenues; 2) the threat to government revenues 
posed by the global reduction in trade tariffs; 3) the 
vulnerability of Lesotho's textile industry to external shocks; 
4) the narrow, non-diversified nature of Lesotho's export and 
main growth sectors; and 5) the underdeveloped nature of the 
financial sector which must foster domestic savings and 
investment. 
 
----------------------------- 
"Towards a Poverty-Free SADC" 
----------------------------- 
 
6.  On March 17, the Ministry of Finance and Development 
Planning held a National Stakeholder consultation workshop 
entitled "Towards a Poverty-Free SADC" in order to assess 
Lesotho's national and regional poverty reduction programs with 
a goal of submitting the nation's Poverty Reduction Strategy 
(PRS) to the SADC Secretariat. 
 
7.  The Finance Ministry's Chief Executive for Economic Policy, 
Mrs. Motena Tsolo, presented a broad overview of the country's 
first PRS, stating critically that the strategy was not 
implemented in a systematic manner and ignored most areas of 
government spending.  She mentioned that although the first PRS 
(2004-2007) brought marginal improvement in some measures of 
poverty reduction, poverty is actually deepening as measured by 
health and infrastructure indicators.  She then highlighted the 
stakeholder coordination which would precede the implementation 
of Lesotho's next PRS.  According to Mrs. Tsolo, the next 
generation PRS will better address private sector-led growth and 
infrastructure development, including manufacturing sector 
infrastructure, to ensure that higher value added production is 
possible in Lesotho. 
 
NOLAN