(MENAFN- The Post)
… Borrows M500m to pay salaries MASERU – THE government is so broke that it had to borrow a staggering M500 million to pay civil servants' salaries. thepost can reveal that the money was borrowed through Treasury Bills from the local market this week. The borrowing spree comes as the government is battling to pay salaries and suppliers due to a massive drop in tax revenues. It comes as Prime Minister Moeketsi Majoro's government is left with two weeks in office. But those few days left on its tenure have not stopped the government from making plans to borrow more money from the local market. Highly placed sources told this paper of plans to issue more Treasury Bills in the next two weeks to raise money to pay suppliers. A source however said there is some reluctance from some technocrats in the Ministry of Finance who believe the government's books and financial control systems are so shambolic that it doesn't know exactly how much it owes the private sector. The arrears fluctuate every day but this paper understands that the government owes between M800 million and M1 billion to the suppliers. Although the government has been grappling with the financial crisis for the past few years the crunch began to bite this year. Sources say this month has been particularly terrible for the government. By last week, a source said, the government had only M150 million for salaries. The total public wage bill is around M600 million. This explains why the government had to borrow half a billion this week through treasury bills issued by the Central Bank of Lesotho. The money arrived in the government's account yesterday afternoon according to sources privy to the transaction. The government has options to pay the debt in three, six, nine or 12 months. But given its precarious financial position, the government is likely to opt for the 12 months. This means the debt will be paid on September 21 next year at about 7.8 percent interest. That translates to an interest of M39 million which brings the amount to M539 million. The latest borrowing pushes the government's domestic debt to M4.3 billion. The foreign debt is around M15.6 billion. Although the debt is moderate, the government might be forced to borrow more if revenues continue to drop. That could spell disaster for the country. As things stand the government has to cut expenditure or look for ways to generate more revenue. But with the economy still smarting from the effects of the Covid-19 pandemic and companies shutting down, there doesn't seem to be much wiggle room. Donor fatigue and the drop in the Southern African Customs Union, once the anchor of Lesotho's budget, have made things worse. Cutting expenditure seems to be the only option but the government appears reluctant to bite the bullet. Lesotho has consistently failed to implement the International Monetary Fund (IMF)'s recommendation to cut the wage bill. Successive ministers have hinted at plans to retrench some government employees but have never implemented them because that has political implications. There are signs that the chickens are eventually coming home to roost. A few days ago Government Secretary Lerotholi Pheko issued a circular announcing a raft of measures to“contain expenditure and overdue payments for ministries, departments and agencies”. Pheko said due to increasing expenditure pressures and a drop in revenue the government is implementing measures that will contain expenditure to levels that are aligned with available resources. “The Ministry of Finance will continue to issue monthly warrants only for wages and salaries as well as essential and critical expenditures in line with the approved procurement and cash plans plus availability of funds,” Pheko said. He ordered chief accounting officers to stop international travel, buying furniture, large maintenance, subsistence allowances, and hiring new staff. Also, all vehicles other than VVIPS will not fuel more than once a week unless they are for essential services as authorised by the government. All government vehicles other than for VVIPs and selected offices must be parked at their designated places by 5pm and shall be used only for authorised purposes, Pheko said. Nkheli Liphoto
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