Feb. 6, 2024


2 min read

CBL increases net international reserves

CBL increases net international reserves

CBL Governor, Dr. Maluke Letete

Story highlights

    Adjustment necessary to ensure stability of loti against the South African rand - Letete
    Inflation rates increased in some advanced and emerging market economies

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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.

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This rise in inflation was attributable to food price hikes as well as alcoholic beverages and tobacco.

The Governor showed that economic activity in selected advanced market economies was generally expected to improve in the fourth quarter of 2023.

South Africa’s economic activity was expected to be supported by rebounds in the mining and manufacturing sectors, despite the country’s infrastructure and logistical hurdles.

“The Committee will continue to closely assess the global economic developments and their impact on the domestic economy, especially the NIR, and respond accordingly,” said the Chairperson of the MPC.

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