Lesotho 2024

Notes:

Notes:
Aggregate expenditure outturn was between 95% and 105% of the approved aggregate budgeted expenditure in at least two of the last three years.

Notes:

Notes:
Variance in expenditure composition by program, administrative or functional classification was less than 15% in at least two of the last three years.

Notes:
Variance in expenditure composition by economic classification was less than 15% in at least two of the last three years.

Notes:
Actual expenditure charged to a contingencies vote was on average more than 3% of the original budget, but less than 6%.

Notes:

Notes:
Actual revenue was between 94% and 112% of budgeted revenue in at least two of the last three years.

Notes:
The variance in revenue composition was less than 10% in two of the last three years.

Notes:

Notes:
For consistency, budget processes use administrative and economic classifications based on GFS/COFOG standards (level 2) or a comparable classification.

Notes:

Notes:
Budget documentation meets all four basic elements and two additional ones, but is missing one additional element for a B score.

Notes:

Notes:
Performance is less than required for a C score; at least half of government expenditure from non-tax revenue and expenditure from donor financed projects (more than 10% in total) is not captured in the CG’s financial reports.

Notes:
Performance is less than required for a C score; interactions with GoL officials, along with a list of extrabudgetary units provided by PSD&FA,suggest that more than 10% of CG revenue is outside of what is included in its financial reports.

Notes:
Performance is less than required for a C score;according to the CG consolidated audited annual financialstatements report for 2021/22, the majority of extra-budgetary units and all CHAL institutions submit their annual financial statements to their respective ministries later than nine months after the end of the fiscal year.

Notes:

Notes:
The horizontal allocations of some transfers to sub-national governments from the Central Government is determined by a transparent, rule-based system.

Notes:
Performance is less than required for a C score; while general budget information is available to SNGs early in the budget process, timing about the actual allocation of funds is unreliable, and funds are lower than expected.

Notes:

Notes:
Performance is below a C score; some MDAs use outdated strategic plans, and their performance indicators in operational plans, the budget speech, and the budget book do not meet PEFA framework requirements or the PFMA Act, 2011

Notes:
Performance is below a C score; the performance indicators in the MDAs’ operational plans, budget speech, and the budget book do not meet PEFA framework requirements or the PFMA Act, 2011.

Notes:
Performance is below a C score; there are no surveys, evaluations, or follow-up reports for the past three years regarding the resources received by service delivery units.

Notes:
Performance is below a C score; there have been no independent evaluations or performance audits of the four ministries, including MoET and MoH, during the review period. Additionally, the Office of the Auditor General conducts performance audits only as needed, not for all ministries.

Notes:

Notes:
Performance falls short of a C score, with only two basic elements and one additional element meeting the nine fiscal information benchmarks in the PEFA Assessment criteria.

Notes:

Notes:
PSD&FA rarely publishes a report on the financial performance of SOEs because many SOEs fail to submit their financial statements within the stipulated time. Nonetheless, the some SOEs submit their financial statements to their respective ministries and publish them.

Notes:
While the financial statements of district councils are audited together with MoLGC financial statement, there is no consolidated report on the financial position and performance of local governments.

Notes:
The consolidated annual financial statements (AFS) of the Government of Lesotho quantify some of the significant explicit contingent liabilities and other fiscal risks. However, there are no contingent liabilities arising from one of the largest PPPs under the Ministry of Health.

Notes:

Notes:
Some capital projects are undergoing PSIC appraisal following the set guidelines. However, the results are not published, and the economic analyses are not reviewed by any entity other than the sponsoring entity.

Notes:
PSIC does not have standard criteria for the prioritisation and selection of capital projects before they are included in the budget, and before the Cabinet considers and approves the capital projects or budget as part of the National Budget.

Notes:
The MTEF includes the capital and recurring costs of major investment projects for the next three years.

Notes:
The Department of Project Cycle Management (PCM) undertakes the physical monitoring of all capital projects, but information on the implementation or deviations from the original plan is not published.

Notes:

Notes:
Private Sector Development and Financial Affairs(PSD&FA) keeps a record of the major categories of financial assets, including equity holdings instate-owned entities (SOEs). However, the market value of these assets in unknown, and information on the performance of these assets is seldom published. The Central Bank of Lesotho (CBL) also manages financial assets such as foreign reserves, loans, and securities owned by the Government of Lesotho (GoL).

Notes:
The Treasury, Commissioner of Land and some ministries maintain a partial register of some fixedassets owned by GoL. However, information on their age and usage is lacking.

Notes:
The legal and regulatory framework provides for fixed asset disposal procedures. The consolidated annual financial statements provide partial information on the proceeds of any fixed assets disposed of.

Notes:

Notes:
The Public Debt and Aid Management Department (PDAMD) produces reports of both domestic and foreign debt, including debt guarantees, and most information is updated and reconciled at least quarterly. The June 2022 Debt Sustainability Analysis (DSA) included a contingent liability stress test designed to assess risks associated with extrabudgetary units, state-owned enterprises (SOEs), public/private partnerships (PPPs), and financial market shocks.

Notes:
There is a robust legal framework for managing public debt and issuing guarantees in Lesotho. Annual borrowing is budgeted for in the annual national budgets, which must be approved by Cabinet and Parliament. However, there is a lack of compliance with the law, as new on-lent loans are still being generated despite the defaulting status ofsome SOEs.

Notes:
The latest MTDS, dated November 2022, covers FY 2022/23-2024/25, includes a description of the existing debt portfolio’s composition and evolution over time, as well as target ranges for indicators such as interest rates, refinancing, and foreign currency risks.

Notes:

Notes:
The Government prepares forecasts of key macroeconomic indicators for the budget year and the two following fiscal years.

Notes:
The Government prepares forecasts of the main fiscal indicators, including revenues (by type), Aggregate expenditure, and the budget balance, for the budget year and following two fiscal years. These forecasts, together with the underlying assumptions, are included in the budget documentation submitted to the Legislature.

Notes:
The macrofiscal forecasts prepared by the Government include a qualitative assessment of the impact of alternative macroeconomic assumptions.

Notes:

Notes:
The Government prepares estimates of the fiscal impact of only a few (not all) proposed changes in revenue and expenditure policy for the budget year and the following two fiscal years.

Notes:
The Government has prepared for its internal use a current fiscal strategy that includes qualitative objectives for fiscal policy.

Notes:
The Government has submitted to the Legislature – and published with the annual budget – a report that describes progress made against its fiscal strategy, and provides an explanation of the reasons for any deviation from the objectives and targets set. The report also sets out actions planned by the Government to address any deviations, as prescribed in legislation.

Notes:

Notes:
The annual budget presents expenditure estimates for the budget year and the two following fiscal years, allocated by administrative and economic classification.

Notes:
Aggregate and ministry-level expenditure ceilings for the budget year and the two following fiscal years are approved by the Government before the first budget circular is issued.

Notes:
Medium-term strategic plans are prepared for the majority of ministries and include cost information. The majority of expenditure policy proposals in the approved medium-term budget estimates align with the strategic plans.

Notes:
The budget documents provide an explanation for some of the changes to the expenditure estimates between the second year of the last medium-term budget and the first year of the current medium-term budget at the aggregate level.

Notes:

Notes:
An annual budget calendar exists, and some budgetary units comply with it and meet the deadlines for completing estimates.

Notes:
A comprehensive and clear budget circular or circulars are issued to budgetary units, covering the total budget expenditure for the full fiscal year. The budget reflects the ministry ceilings approved by the Cabinet (or equivalent) prior to the distribution of the circular to the budgetary units.

Notes:
The executive has submitted the annual budget proposal to the Legislature at least one month before the start of the fiscal year in two of the last three years.

Notes:

Notes:
The Legislature’s review covers fiscal policies and aggregates for the coming year, as well as details of expenditure and revenue.

Notes:
The Legislature’s procedures for reviewing budget proposals are approved by the Legislature in advance of budget hearings, and are adhered to. The procedures include arrangements for public consultation.

Notes:
They also include internal organizational arrangements, such as specialized review committees, technical support, and negotiation procedures.

Notes:
The Legislature has approved the annual budget within one month of the start of two or more of the last three fiscal years.

Notes:

Notes:
RSL provides information regarding taxpayers’ obligations and rights on its website for easy access, which is simple to comprehend and easy to download. Also, both the Ministry of Natural Resources (through its Department of Energy and Water) and the Ministry of Mining have made information on the obligations and rights of their customers readily available on the websites of their respective departments.

Notes:
After the previous PEFA Assessment, in 2016 RSL (then known as LRA) developed the Compliance Model to assist in understanding the business/industry-related, sociological, financial and psychological factors that influence taxpayer behaviour, and to help it apply the most appropriate compliance strategy.

Notes:
For the fiscal year 2022/2023, there was no information provided with regard to audit and fraud investigations, or how they are managed and reported; the same applies to the completion rates from audit and fraud investigations or other collection entities, implying that no audits were performed.

Notes:
The stock of revenue arrears at the end of the fiscal year 2022/2023 was 10.7 percent of the total revenue collection for the year, and the revenue arrears that were older than 12 months amounted to 24.8 percent of the total annual arrears.

Notes:

Notes:
The Ministry of Finance obtains revenue data from the collecting agencies at least weekly. The data regarding the revenue transferred from all collecting agencies to the central agency is broken down by type and is consolidated into a status report that is available on IFMIS.

Notes:
RSL collects revenue on a daily basis to its commercial bank accounts across the ten districts, but the sweep to the Treasury’s Main Revenue Account is performed on a weekly basis. The Ministry of Natural Resources(MoNR), through its Department of Water and Energy, collects revenue on a daily basis and also performs a daily sweep into the Treasury’s Main Revenue Account.

Notes:
Neither the Tax Revenue nor the Non-Tax Revenue are subjected to the reconciliation of collections, transfers and arrears.

Notes:

Notes:
There exists a Treasury Single Account (TSA) with eight bank accounts that are consolidated on a daily basis, while most of the other bank accounts are consolidated monthly.

Notes:
The cash flow forecast is prepared at the beginning of every fiscal year and is subsequently updated daily.

Notes:
According to the Warrants Release, the Ministry of Finance (MoF) issues quarterly expenditure commitment ceilings to line ministries. Actual cash is released on a weekly basis or if the need arises.

Notes:
In the periods under the review, requests for and approvals of significant budget adjustments were made and recorded.

Notes:

Notes:
The stock of expenditure arrears is less than 6% of total expenditure in the last three completed fiscal years, i.e. 2020/2021, 2021/2022 and 2022/2023.

Notes:
Even though the analysis of expenditure arrears provides an age analysis of arrears classified; under more than a year, over six months, over three months, and less than three months, they are consolidated on an annual basis.

Notes:

Notes:
The Ministry of Public Service runs the payroll, whereas changes within the system are done by responsible MDAs, implying that the system has been decentralized.

Notes:
With the new system, the Organisational Development Department (OD) of HRMIS controls the establishment function, which includes the creation, filling, abolition and funding of positions. MDAs are responsible for capturing authorized changes in the system on a monthly basis before the next payroll cycle.

Notes:
The changes in the MDAs go through a chain process, with an HR official executing the changes, the HR manager reviewing the changes, and the HR director or HR head approving the changes made within the permitted time window.

Notes:
No payroll audits have been conducted.

Notes:

Notes:
There is no reliable record/database for monitoring the management of procurement.

Notes:
There is no record/database of what has been procured or what method was used. Details regarding the extent of deviations are not available centrally at PPAD.

Notes:
Only one of the procurement elements is publicly available (that is, bidding opportunities in newspapers).

Notes:
There is a Procurement Tribunal that is independent, does not charge fees to the parties involved, and publicizes the complaints after reviewing and making decisions during a time frame of 10 working days. The Tribunal issues binding decisions on the parties concerned and has the authority to suspend the procurement process.

Notes:

Notes:
The Public Financial and Management and Accountability Act, 2011 and Treasury Regulations, 2014, Public Procurement(Amendment) Regulation, 2018, contain rules, regulations and procedures that guide the separation of duties regarding the expenditure processes of the Government of Lesotho (GoL).

Notes:
There are instances where commitments are raised outside IFMIS, such as payments for infrastructure projects where the projects span multiple financial years. This implies that control procedures for commitments exist but are only partially effective.

Notes:
There is no evidence of payment vouchers relating to the review period.

Notes:

Notes:
Most line ministries have their own internal auditors, were performed, internal audit reports were produced.

Notes:
Nine internal audits in line with the international audit standards were undertaken for FY 2020/21 and 2021/22.

Notes:
There is an operational plan for MoFDP, and there are also a few internal audit reports produced in FY 2022/23.

Notes:
Though it has been limited in scope, there is some indication of executive action or responses to the audit findings for FY 2020/2021 and 2021/2022.

Notes:

Notes:
Reconciliation of all active bank accounts is performed, but there is no evidence to show whether it takes place on a monthly basis as there is a lack of monitoring relating to submissions to the Treasury, and there are no dates and/or signatures attached to the reconciliations.

Notes:
The suspense accounts identified are the below-the- line accounts which date as far back as 2009 and have not been reconciled since 2009.

Notes:
Advance accounts still had balances at the reporting dates, indicating that they were not being cleared in a timely manner.

Notes:
Financial data is kept in the IFMIS electronic system. IFMIS assures financial data integrity process with audit trails; access is limited to authorized personnel only, and changes to records and data are restricted and recorded. The access of officials is restricted in line with their duties, using controlled passwords.

Notes:

Notes:
The in-year budget report is compatible with approved budget classification and allows for direct comparison. However, expenditure for deconcentrated units such as the extra-budgetary units is still not incorporated into the consolidated reports.

Notes:
In-year budget reports are supposed to be issued quarterly and presented to the Cabinet and Parliament by the Office of the Accountant General. However, the only report available was the mid-year budget review report for 2022/2023 on the website and Budget Office of the Ministry of Finance. Quarterly reports were not available.

Notes:
There are still significant concerns regarding data integrity due to possible backdating and adjustments even after year- end. Expenditure in the reports reflects the payment and commitment stage.

Notes:

Notes:
Financial Statements are prepared annually and are consistent with the approved budget. All of the minimum requirements of IPSAS cash basis have been complied with. Annual Financial Statements contain information on revenue, expenditure, financial assets and financial liabilities, guarantees, and long-term obligations.

Notes:
Financial statements are supposed to be submitted for audit within 5 months of the end of the financial year. However, the financial statements for 2023 were submitted 15 months later.

Notes:
The financial statements are prepared in accordance with the IPSAS cash basis. Accounting standards have been consistently applied for the last three years under assessment.

Notes:

Notes:
Insufficient information to merit a valid score.

Notes:
Performance is less than required for a C score.

Notes:
A formal response was made by the executive or the audited entity on audits for which follow up was expected, during the last three completed fiscal years.

Notes:
Performance is less than required for a C score.

Notes:

Notes:
Performance is less than required for a C score.

Notes:
In-depth hearings on key findings of audit reports take place occasionally, covering a few audited entities or may take place with Ministry of Finance officials only.

Notes:
None of the audit reports for the years under review have been fully scrutinized by the Legislature.

Notes:
Performance is less than required for a C score.