LESOTHO

RISK RATING
High
Default High Risk Score 6.50
Normal Average 3.73
Weighted Average 3.40
RISK RATING HISTORY
RISK RATING SCALE

Risk Rating Scale

Severe: 8.0 to 10
High: 6.0 to 7.9
Elevated: 4.0 to 5.9
Moderate: 2.0 to 3.9
Low: 0.0 to 1.9
EXCHANGE RATE
Country Outlook

The peaceful transition of power in the tiny mountain kingdom bodes well for Lesotho‚Äôs chances to secure further multilateral aid to fight the coronavirus and mitigate the impact of an economic slowdown. After many months of political turmoil in which former prime minister Thabane refused to step down, the small landlocked kingdom of Lesotho has just ushered in another new coalition government ‚Äď this time under the leadership of the renowned technocrat Moeketsi Majoro. However, despite this success, Majoro and his administration are expected to face a number of challenges ahead. Beyond navigating a difficult political landscape, Majoro will also be tasked with carrying through with the reform of the security sector and the hosting of a national dialogue:

  • The new government is yet another coalition comprising the ABC and the opposition DC. It is supported by several smaller parties including the BNP and RCL. Majoro is mandated to stay in power until the next elections, which are scheduled for June 2022. He enjoys significant support within the ABC. Most importantly, Deputy ABC leader, Professor Nqosa Mahao and his faction have thrown their weight behind Majoro. Mahao holds significant weight within the party and has often been punted as a future prime minister of Lesotho; however, he is not a member of Parliament and cannot enter Cabinet yet. While Majoro has served in cabinet before, he is largely seen as a technocrat and is not assessed to be adept at navigating any political manoeuvring.
  • Crucial security sector reform has been stalled, raising the risk of further military interventions. The Lesotho Defence Force (LDF) has long been a political actor, intervening in politics regularly since the re-establishment of democracy. Security sector and the hosting of a national dialogue formed part of SADC‚Äôs mission to the country that began in 2015. The reform and dialogue aim to depoliticise the army and police and require constitutional amendments in this regard. In addition to confronting the long-standing political and security issues of Lesotho, Majoro‚Äôs immediate attention is likely to be focused on COVID-19.
  • An IMF bailout has become more likely under the new government. The spread of the virus is worrying in Lesotho, which is already burdened with high levels of poverty, drought, a major external shock through the decline in customs revenues. While Lesotho failed to secure an economic bailout from the IMF under Thabane, Majoro may now be able to work with the institution in this regard. The IMF has specifically advised the government to cut down on spending within the public sector, and Majoro has already taken steps to this end, cutting his cabinet from 26 to 17 ministers. Majoro has also indicated that he has already received calls from his colleagues from international finance circles to help him rebuild Lesotho whilst the EU has indicated that it is encouraged by his leadership. These developments bode well for the re-engagement of the international community with Lesotho, as it navigates the many economic, political, and potential security challenges ahead.
CUMULATIVE AND DAILY COVID-19 INFECTIONS AND DEATH RATE
INTERNATIONAL MONETARY FUND | DATAMAPPER
Risk Perils
Political Instability
3.5
Expropriation, Nationalisation, Confiscation & Deprivation
2.2
Contract Frustration & Breach
3.0
Taxation
4.0
Bribery & Corruption
4.0
Regulatory Burden
3.0
Strikes, Riots & Civil Commotion
2.8
Security
2.8
Sovereign Default
5.5
Economic Volatiliy
6.5

Risk Rating Scale (small)

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