Sekondi Accra

King Letsie III is the head of state but the monarchy has no executive or legislative powers and his country's economic prospects will remain uncertain in 2011 as the political posturing leads up to the 2012 elections. The real power behind the throne is emboddied in the person of Prime Minister Bethuel Pakalitha Mosisili. In the short term, Lesotho is struggling to find funds not tied its neighbor South Africa. Revenue from the Southern African Customs Union (SACU), which comprises close to 60% of Lesotho's tax receipts, may decrease by 23% of GDP from 2012-2013. Continuing moves to adjust SACU's revenue sharing formula could have notable consequences. Announcing his 2012 budget, finance minister Timothy Thahane stressed Lesotho's need to base growth on domestic sources of revenue.

A decrease in remittances from the 50,000 Basotho working in South Africa and decreasing demand for textile exports have left Lesotho's economy in dire straits. Five years of budget surpluses have turned into a deficit of 2.7% of GDP in 2009-2010, as economic growth slowed to 0.9%. The International Monetary Fund (IMF) forecasts that real GDP growth will increase to reach an average of 4.3% over the next three years. However, the diamond industry began production in 2010 at the Mothae mine and is due to restart at Liqhobong in 2011.

Construction of the private-funded Metolong Dam has begun and should be completed in 2013. The dam will help secure water supplies for the lowlands and draw attention away from the paradox that Lesotho sells water to South Africa even as it suffers from its own shortages. Building of the second phase of the cross-border Lesotho Highlands Water Project, two-thirds funded by South Africa, is scheduled to begin in 2013 with completion expected in 2017.

In May 2010, South Africa changed rules that had allowed Basotho to cross the border with a simple travel document. Now they must have a passport and can only stay for 30 days. Long queues now form at border posts, irritating relations between the two countries. A visit to Maseru by President Jacob Zuma in August 2010 brought minor resolution.

The unions are seeking radical solutions. In May 2010, the Lesotho's People Charter Movement (LCPM) petitioned the government and the South African High Commission in Maseru for Lesotho to become part of South Africa because Vuyani Tyhali, the LCPM leader and Lesotho's Teachers Trade Union secretary general, stated in The Africa Report: "There's no economy in Lesotho. We are just a labour reserve for South African mines and farm areas". Neither side has so far given an official response. However, the chance of such is improbable.

Considerable political energy has been exerted in the past four years on trying to resolve disagreements over the troubled 2007 elections. Since mediation by the South African Development Community to end the political impasse ended in 2009, a dialogue led by the churches has had more success and reduced the risk of violence. This issued should soon be concluded, but without political reforms.

Both the ruling Lesotho Congress for Democracy (LCD) and the opposition are in disarray. Some LCD factions are pushing for a change in leadership. Likely challengers to Prime Minister Mosisili are Monyane Moleleki and Mothetjoa Metsing. In a flexing of political muscle in early October 2010, Mosisili announced Lesotho's first cabinet changes for nine years. Four ministers were dismissed and replaced by associates close to the prime minister.

The breakup of the alliance between the All Basotho Convention (ABC) and the Lesotho Workers Party, and ensuing arguments between their leaderships have diminished the opposition's voice. The ABC has expressed discontent with the management of the electoral commission and may not cooperate with preparations for the 2012 elections.


Official Data

Prime Minister

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