[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-110674-en":3,"doc-seo-110674-105":29,"detail-sidebar-cat-0-en-105":90},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":4,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},110674,13056703019404,"Miles","https://ap-avatar.wpscdn.com/davatar_29158cc5080c5b710cf443261637dec0",8,"Research & Report","Kingdom of Lesotho - Joint Bank-Fund Debt Sustainability Analysis - Moderate Risk Assessment","Joint World Bank–IMF Debt Sustainability Analysis assesses the Kingdom of Lesotho’s external and overall debt distress risk as moderate, while noting rising threats to sustainability since the previous DSA. Key drivers include weaker SACU transfers, higher public expenditure, new borrowing, and expanding contingent liabilities. Despite an FY20/21 exchange-rate appreciation that eased the debt burden, near-term debt indicators are projected to deteriorate before improving over the medium term. The framework emphasizes fiscal consolidation, buffer building, and managing pension-fund related liabilities, with recommendations to control current spending, improve capital efficiency, address contingent risks, and develop domestic debt markets.","Public Disclosure  \nPub lic Disc losure Authorized  \nApproved by:  \nAsad Alam and Marcello Estevão (IDA) Vivek Arora and Bjoern Rother (IMF)  \nPrepared by the staff of the International Development Association (IDA) and the International Monetary Fund (IMF) .  \n\n| KINGDOM OF LESOTHO : JOINT BANK-FUND DEBT SUSTAINABILITY ANALYSIS |  |\n| --- | --- |\n| Risk of external debt distress | Moderate |\n| Overall risk of debt distress | Moderate |\n| Granularity in the risk rating | Limited space |\n| Application of judgment | No |\n\nLesotho’s risk of external and overall debt distress remains moderate but risks to debt sustainability have risen since the last DSA.1 While the exchange rate appreciation in FY20/21 somewhat lowered the debt burden, falling SACU transfers, growing public expenditure, new borrowing, and increasing contingent liabilities have elevated debt sustainability risks. Lesotho’s debt indicators are expected to deteriorate in the near term before improving over the medium term, supported by recovering SACU transfers and slower growth in public expenditure relative to GDP. The moderate risk rating suggests limited space to absorb shocks. The DSA highlights the importance of fiscal consolidation to stabilize debt levels, build buffers for future shocks, and prevent the crowding out of credit to the private sector. Controlling current expendituresand improving the efficiency of capital spending, among other measures advised in the report, will be critical for fiscal consolidation. The results also show the need to address contingent liability risks, mainly stemming from the financing shortfall of the pension fund. Finally, the authorities should also prioritize developing domestic debt markets.  \n1. The DSA covers the central government debt, central bank debt taken on behalf of the government, and government-guaranteed debt (Text Table 1) .2 Debt coverage includes both external and domestic obligations. Foreign currency-denominated debt is used as a proxy for external debt as data on creditor residency is unavailable and there is no nonresident participation in the domestic debt market. Debt also includes domestic arrears, estimated at 3.4 percent of GDP as of March 2022.3 While total SOE debt is not yet available, government-guaranteed debt is available and included. Debt guarantees related to COVID-19 measures are also included.  \n2. Debt coverage is similar to the previous DSA. However, the authorities are making progress to expand the reporting and coverage of public debt by including non-guaranteed and on-lent debt of SOEs. They also plan to publish outstanding debt of SOEs, including guarantees, on the website of the Ministry of Finance from FY22/23 in agreement with the World Bank under the Sustainable Development Financing Policy (SDFP) .  \n3. The DSA includes a contingent liability stress test to capture extrabudgetary units, SOEs, Public Private Partnerships (PPPs), and financial market shocks in the assessment (Text Table 2) . The contingent liability stress test incorporates the following shocks:  \n• The pension fund—estimated at 9.6 percent of GDP.4  \n• Liabilities associated with potential asset seizures—estimated at 2.5 percent of GDP.5  \n• 5 percent of GDP for a financial market shock that exceeds the existing stock of banks’ NPLs.  \n• 3.7 percent of GDP for non-guaranteed SOE debt, which is not captured in the government debt stock. Calibration includes LSL1 billion on-lent debt of SOEs and an estimate for non-guaranteed debt of the 10 SOEs.  \n• 1.1 percent of GDP to account for Lesotho’s PPP capital stock, as specified in the World Bank’s database on PPPs.  \n|  |\n| --- |\n| 1\u003Cbr>2\u003Cbr>3\u003Cbr>4\u003Cbr>5\u003Cbr>6\u003Cbr>7\u003Cbr>8 Subsectors of the public sector Sub-sectors covered Central government\u003Cbr>State and local government\u003Cbr>Other elements in the general government\u003Cbr>o/w: Social security fund\u003Cbr>o/w: Extra budgetary funds (EBFs)\u003Cbr>Guarantees (to other entities in the public and private sector, including to SOEs)\u003Cbr>C","cbCaiafCFkrdcqZj","https://ap.wps.com/l/cbCaiafCFkrdcqZj","pdf",949915,1,19,"English","en",105,"# Risk assessment and overall conclusions\n## External debt distress level\n## Overall risk and judgment use\n# Drivers of changing debt sustainability risk\n## SACU transfers and exchange rate effects\n## Borrowing, expenditure, and contingent liabilities\n# Debt coverage and methodology\n## Scope of central government and contingent elements\n## Treatment of domestic arrears and SOE guarantees\n# Contingent liability stress tests\n## Pension fund funding shortfall\n## Asset seizure and PPP/financial market shocks\n# Debt indicators and recent dynamics\n## Public debt-to-GDP trends and COVID-19 impact","[{\"question\":\"How does the analysis rate Lesotho’s risk of debt distress?\",\"answer\":\"Both external debt distress and overall risk of debt distress are rated as moderate. The report also highlights limited space to absorb shocks under this rating.\"},{\"question\":\"What factors have increased Lesotho’s debt sustainability risks since the previous DSA?\",\"answer\":\"The report points to falling SACU transfers, growing public expenditure, new borrowing, and rising contingent liabilities. Exchange-rate appreciation in FY20/21 helped somewhat, but the net risk has increased.\"},{\"question\":\"What contingent liabilities are included in the stress test and why are they important?\",\"answer\":\"The DSA includes shocks tied to the civil service pension fund funding shortfall, potential asset seizures, and other contingent elements such as non-guaranteed SOE debt and PPP capital stock. These stresses are used to capture fiscal risk beyond the core debt stock.\"}]",1784486545,48,{"code":4,"msg":30,"data":31},"ok",{"site_id":24,"language":23,"slug":32,"title":13,"keywords":33,"description":14,"schema_data":34,"social_meta":85,"head_meta":87,"extra_data":89,"updated_unix":27},"kingdom-of-lesotho-joint-bank-fund-debt-sustainability-analysis-moderate-risk-assessment","",{"@graph":35,"@context":84},[36,53,67],{"@type":37,"itemListElement":38},"BreadcrumbList",[39,43,47,50],{"item":40,"name":41,"@type":42,"position":20},"https://docshare.wps.com","Home","ListItem",{"item":44,"name":45,"@type":42,"position":46},"https://docshare.wps.com/document/","Document",2,{"item":48,"name":12,"@type":42,"position":49},"https://docshare.wps.com/document/research-report/",3,{"item":51,"name":13,"@type":42,"position":52},"https://docshare.wps.com/document/kingdom-of-lesotho-joint-bank-fund-debt-sustainability-analysis-moderate-risk-assessment/110674/",4,{"url":51,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":23,"description":14,"dateModified":61,"datePublished":61,"encodingFormat":60,"isAccessibleForFree":62,"interactionStatistic":63},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":40,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-19",true,{"@type":64,"interactionType":65,"userInteractionCount":4},"InteractionCounter",{"@type":66},"ViewAction",{"@type":68,"mainEntity":69},"FAQPage",[70,76,80],{"name":71,"@type":72,"acceptedAnswer":73},"How does the analysis rate Lesotho’s risk of debt distress?","Question",{"text":74,"@type":75},"Both external debt distress and overall risk of debt distress are rated as moderate. The report also highlights limited space to absorb shocks under this rating.","Answer",{"name":77,"@type":72,"acceptedAnswer":78},"What factors have increased Lesotho’s debt sustainability risks since the previous DSA?",{"text":79,"@type":75},"The report points to falling SACU transfers, growing public expenditure, new borrowing, and rising contingent liabilities. Exchange-rate appreciation in FY20/21 helped somewhat, but the net risk has increased.",{"name":81,"@type":72,"acceptedAnswer":82},"What contingent liabilities are included in the stress test and why are they important?",{"text":83,"@type":75},"The DSA includes shocks tied to the civil service pension fund funding shortfall, potential asset seizures, and other contingent elements such as non-guaranteed SOE debt and PPP capital stock. These stresses are used to capture fiscal risk beyond the core debt stock.","https://schema.org",{"og:url":51,"og:type":86,"og:title":13,"og:site_name":58,"og:description":14},"article",{"robots":88,"canonical":51},"index,follow",{"doc_id":7,"site_id":24},{"code":4,"msg":5,"data":91},[92,96,100,104,109,114,119,122,127,130,134],{"id":20,"doc_module":4,"doc_module_name":45,"category_name":93,"show_sort_weight":94,"slug":95},"Story & Novel",90,"story-novel",{"id":46,"doc_module":4,"doc_module_name":45,"category_name":97,"show_sort_weight":98,"slug":99},"Literature",80,"literature",{"id":52,"doc_module":4,"doc_module_name":45,"category_name":101,"show_sort_weight":102,"slug":103},"Exam",70,"exam",{"id":105,"doc_module":4,"doc_module_name":45,"category_name":106,"show_sort_weight":107,"slug":108},5,"Comic",60,"comic",{"id":110,"doc_module":4,"doc_module_name":45,"category_name":111,"show_sort_weight":112,"slug":113},6,"Technology",50,"technology",{"id":115,"doc_module":4,"doc_module_name":45,"category_name":116,"show_sort_weight":117,"slug":118},7,"Healthcare",40,"healthcare",{"id":11,"doc_module":4,"doc_module_name":45,"category_name":12,"show_sort_weight":120,"slug":121},30,"research-report",{"id":123,"doc_module":4,"doc_module_name":45,"category_name":124,"show_sort_weight":125,"slug":126},9,"Religion & Spirituality",20,"religion-spirituality",{"id":125,"doc_module":4,"doc_module_name":45,"category_name":128,"show_sort_weight":125,"slug":129},"World Cup","world-cup",{"id":131,"doc_module":4,"doc_module_name":45,"category_name":132,"show_sort_weight":131,"slug":133},10,"Lifestyle","lifestyle",{"id":21,"doc_module":4,"doc_module_name":45,"category_name":135,"show_sort_weight":105,"slug":136},"General","general"]