Lesotho Public Investment Management Efficiency Review

Abstract

Lesotho is a small landlocked country with a homogenous population of 2.1 million. Lesotho's gross domestic product (GDP) per capita was 1,023 dollars and gross national income (GNI) per capita was 1,080 dollars in 2010. The country also faces numerous challenges to its social and human development. In this context, more attention on the role and quality of public investment is warranted. To improve public accountability and transparency, the Government of Lesotho (GoL) introduced the automated integrated financial management information system (IFMIS) in April 2009. The study directly responds to an explicit request of technical assistance from the ministry of finance and development planning (MoFDP) and aims at supporting the GoL in its major reform efforts to enhance the efficiency of public investment management (PIM) and increase the "value for money" in capital spending. The overarching objective of this study is to support the GoL in its efforts to prioritize public resource allocation and enhance efficiency in capital spending, with the ultimate goal of contributing to improved governance, service delivery, and economic growth. The work is aligned with the World Bank country assistance strategy (CAS) 2010 to 2014, in particular its first pillar on fiscal adjustment and public sector efficiency. This report emphasizes the complementary aspects of the institutions, incentives, capacity, and process-related constraints to the functioning of PIM. The focus of this report will also complement ongoing public financial management (PFM) support by other development partners. The report is presented in four chapters, which are organized as follows: chapter one offers a macro-level country analysis; chapter two presents recent trends in public investments; chapter three focuses on institution mapping and the diagnostic assessment of the PIM system; and chapter four concludes with policy implications.