Selected Issues Papers

Policy Coordination in Lesotho: Kingdom of Lesotho

Author/Editor:

Yibin Mu

Publication Date:

December 6, 2022

Electronic Access:

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Summary:

In a country such as Lesotho with high capital mobility and leakages abroad, the relationship between both fiscal, monetary, and exchange rate policy is intertwined, such that public spending and reserves are strongly linked. The paper offers an overview of the economic institutions and arrangements in Lesotho, discusses a short primer on macroeconomic policies under a fixed exchange rate, stresses a vital role for macro policy coordination in Lesotho, and proposes a macro policy framework. While the paper is developed in context of Lesotho, the analysis should also be applicable to small open economies under the fixed exchange rate arrangement.

Series:

Selected Issues Paper No. 2022/003

Subject:

International organization Monetary policy

Frequency:

Regular