CENTRAL Bank of Lesotho (CBL) resolved to increase the target for net international reserves (NIR) to US$750 million (M14.1 billion) from US$710 million (13.4 billion) during its 105th Monetary Policy Committee (MPC) meeting.

The Governor of CBL, Dr. Maluke Letete said this adjustment is necessary to ensure the stability of the loti against the South African rand.

Additionally, the Committee has chosen to keep the CBL rate unchanged at 7.75 percent per year.

Dr. Letete said in November last year, there was a contraction in domestic economic activity, which followed a period of stronger growth in the previous month.

"Headline inflation increased to 7.2 percent in December 2023 from 6.8 percent in November 2023. Domestic contributors to the high inflation were food, energy, and clothing prices, while the external drivers were the weak exchange rate and renewed geopolitical tensions.

“This continued weaker loti, volatile commodity prices, and climate-related events present risks to the medium-term inflation outlook. The broad money supply increased in November 2023. This growth was supported by the increase in net domestic assets as well as increased private credit, largely underpinned by credit extended to households. However, the rise was moderated by the fall in net foreign assets,” he said.

Apart from that, he said government operations registered a deficit equivalent to 5.6 percent of GDP (gross domestic product), which marginally declined by 0.3 percent.

Taking stock of the global economies, MPC noted that inflation rates increased in some advanced and emerging market economies while declining in others in December 2023.