Kingdom of Lesotho; 2006 Article IV Consultation: Staff Report; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Kingdom of Lesotho

Lesotho is a small, landlocked, low-income country, with limited natural resources and a narrow production and export base. In recent Article IV consultations, IMF staff has emphasized the importance of ensuring that increases in outlays for poverty reduction are consistent with fiscal sustainability and absorptive capacity. However, economic activity has remained sluggish, reflecting the adverse impact of exogenous shocks. Fiscal management is becoming more challenging. The authorities are making efforts to implement their poverty reduction strategy. The political situation is relatively stable.