Matekane’s big headache

MASERU – INCOMING Prime Minister, Sam Matekane, will next week take over a government whose coffers are empty.

Matekane, who is already selecting his cabinet, will find huge holes in the government’s finances.

The government has been battling to pay salaries for the past six months and has suspended payments to suppliers.

Last month, the government borrowed M500 million from the local market, through treasury bills, to pay salaries.

By Monday this week officials in the Ministry of Finance were reporting that the government owes local suppliers a staggering M1.2 billion, with some of the debts dating several years back.

Sources this week told thepost that officials in the Ministry of Finance are not agreeing on the exact amount of the arrears.

Part of the problem, several sources said, is that the government’s accounting is a mess. “The figures keep fluctuating and no one knows what the government owes to the local companies,” said one source.

“The truth is that no one in finance has the exact amount,” said another source.

thepost understands that the Ministry of Finance has been negotiating with local banks for a financial package to help clear the arrears.

The negotiations are said to have started three weeks ago but have been slow because there is no clarity on the arrears.

Also complicating the negotiations is that the government doesn’t want the loan to be deposited into its accounts but paid directly to the suppliers.

That, however, is not possible unless the Ministry of Finance knows exactly how much it owes. thepost has been told that finance officials met the bankers again yesterday afternoon.

Apart from the arrears, the government is also struggling with its M600 million month wage bill which has been ballooning over the years despite stern warnings from local and international economists.

The International Monetary Fund (IMF) has repeatedly advised Lesotho to cut the wage bill. Successive governments have not made good on their promises to put a cap on recruitment and weed out ghost workers.

The source said the government only has enough money to cover salaries for this month and the next.

“December is likely to be a huge problem,” the source said.

Matekane takes over at a time when revenues from local, regional and international sources have dwindled.

The impact of the Covid-19 lockdowns still lingers, with companies struggling to get back on their feet and others shutting down.

The companies, especially those owed by the government, have been unable to keep up with their tax obligations to the Revenue Services Lesotho (RSL).

At the same time, VAT receipts have been low due to poor demand. Revenues from the Southern African Customs Union have been slow to recover from the impact of the pandemic. Donor fatigue has also set in as rich countries focus on their own problems or shift aid to Ukraine.

Matekane’s coalition partners have already started raising alarm bells about the government’s financial problems. Liteboho Kompi, the spokesperson for the Movement for Economic Change (MEC), told thepost that they already know “the government’s bag is empty”.

The MEC, Alliance of Democrats (AD) and Matekane’s Revolution for Prosperity (RFP) have cobbled up a deal to form a government.

“We have employed a local consultant who told us that the government has no money,” Kompi said.

Kompi said their priority as the new government will be to collect money from all government sources.

However, the outgoing Finance Minister Thabo Sophonea told thepost last night it is not true that the government is totally broke.

“Every day the revenue authority is collecting, every month we get money from SACU and the water royalties,” Sophonea said.

“Under these circumstances, how can one say there is zero balance in the government coffers?” he said.

Sophonea cautioned that social media sources could be misleading because “you don’t even know their source of information”.

“Even if the information does not come from social media, where did they get the zero balance information from?” he said.

He however referred other questions to the accountant general.

Accountant General ‘Malehlohonolo Mahase said it is not true that the government’s coffers are empty.

“You can even come and see for yourself but don’t bring the camera,” she said.

Majara Molupe