Selected Issues Papers

Evaluating Fiscal Rules for Lesotho: Kingdom of Lesotho

Author/Editor:

Yibin Mu

Publication Date:

December 6, 2022

Electronic Access:

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Summary:

A key challenge for Lesotho is the downward rigidity in public expenditure—which increases when SACU transfers are buoyant but fails to be pared back when they fall. Fiscal rules would be of value in Lesotho to help provide constraints on spending and resist political pressure to overspend, while embedding fiscal responsibility within the country’s macro-fiscal framework and ensuring debt sustainability. This paper evaluates options for fiscal rules for Lesotho, discusses the institutional framework required to help underpin a sound fiscal-rule framework, posits a possible fiscal-rule framework for Lesotho, and offers a roadmap to introduce the framework.

Series:

Selected Issues Paper No. 2022/001

Subject:

International organization Monetary policy

Frequency:

Regular