WASHINGTON, July 2, 2010 — The World Bank’s Board of Executive Directors yesterday endorsed a new Country Assistance Strategy (CAS) for the Kingdom of Lesotho which will support the country’s efforts to adjust fiscally to pressures generated by the global financial crisis, boost the economy’s competitiveness, improve public sector efficiency, combat HIV/AIDS, and strengthen service delivery.
“This new strategy builds on a solid partnership between Lesotho and the World Bank. It recognizes that Lesotho is facing significant challenges due to the global financial crisis and a shrinking revenue base, and it aims to help Lesotho sustain the economic growth momentum and improve human development indicators,” said Ruth Kagia, World Bank Country Director for Lesotho.
Over the past decade, the landlocked Kingdom of Lesotho has enjoyed political and macroeconomic stability and benefited from reforms that enabled the economy to achieve a respectable growth rate of 3.4 percent during 2004-2008.
The onset of the global financial crisis and a sharp projected decline in revenues from the Southern African Customs Union (SACU) which account for over 60 percent of the government’s revenue base are threatening to exacerbate macroeconomic risks to the economy. Furthermore, loss of textile markets due to the slowdown in the US, and decline in diamond trade are posing new challenges.
The World Bank has committed US$55 million in fiscal years 2009 and 2010. The new strategy covers the full three years of the next replenishment cycle of IDA (IDA16), and envisages support of US$ 110 million for the period 2011-2014.
Partnerships are a recurring theme in the new assistance strategy. Despite the small IDA envelope, the World Bank is forging strategic partnerships with the Government of Lesotho and its development partners, and using the power of leveraging to mobilize additional resources. For example, a US$25 million investment in the Metolong water project is helping to mobilize US$300 million, and a US$5 million IDA grant is being used to improve the Government’s capacity to implement projects worth more than US$100 million financed by the Global Fund, PEPFAR, and other partners.
The CAS was developed through a broad-based, consultative process that engaged the various arms of the Government of Lesotho, private sector, civil society, and development partners.
“The new country partnership strategy is a forward-looking document that builds on Lesotho’s past successes and positions the economy for achieving greater levels of growth and benefiting from the global recovery,” said Larisa Leschchenko and Husam Abudagga, World Bank Co-Task Team Leaders who led the development of the strategy. “In developing the strategy, we consulted widely and look forward to successful implementation for the benefit of the Basotho people.”
The CAS covers the period from 2010-2014, and succeeds the earlier CAS that was approved by the Board in March 2006.